US Government Seeks to Intervene in Crypto Fraud CFTC Case

The government believes that continuing the CFTC's case uninterrupted could result in interference with a parallel case

The government of the United States is aiming to intervene in a lawsuit brought by the Commodity Futures Trading Commission (CFTC) against Jon Barry Thompson, an alleged Bitcoin scammer who has been charged with commodities fraud and wire fraud offenses.

The effort to intervene went public on November 19, 2019, when the government filed a set of documents with the New York Southern District Court to request the right to intervene as well as a staying of civil proceedings until the conclusion of a parallel case involving Thompson, United States v. Jon Barry Thompson, 19 Cr. 698.

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”If this case were to proceed, there would be a risk of significant interference with the Criminal Case.”

According to the filing, the government believes that continuing the case uninterrupted could result in interference with the parallel case. “If this case were to proceed, there would be a risk of significant interference with the Criminal Case,” the filing reads, referring to the CFTC’s case.

“A complete stay would prejudice no party to this civil action; would prevent the circumvention of important statutory limitations on criminal discovery and avoid asymmetrical discovery, and would preserve the Court’s resources because many of the issues presented by the civil action will be resolved in the Criminal Case.”

The first of the two cases was brought against Thompson on July 25, 2019, and charged Thompson with two counts of commodities fraud and two counts of wire fraud.

According to Finance Feeds, “the charges related to two fraudulent schemes in which Thompson induced two victim companies to send millions of dollars to his companies, Volantis Escrow Platform LLC and Volantis Market Making LLC in connection with the sale of Bitcoin.”

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The indictment on that case was returned on September 25, 2019, when Thompson was charged with the same counts based on the same conduct alleged in the criminal complaint.

The CFTC’s complaint, which was based on the same case, was filed on the same day that the indictment was returned.

Thompson “induced two customers to send roughly $7 million to fund the purchase of bitcoin”

The charges refer to events that take place around 2018, when Thompson is said to have “induced two customers to send roughly $7 million to fund the purchase of bitcoin after making false representations that he or the company had the bitcoin in hand and the customers’ money would be safeguarded, according to Finance Feeds.

After receiving the customers’ money, Thompson allegedly sent almost all of it to third parties, and failed to provide the Bitcoins that were promised in return. Thompson is also said to have lied to the customers about the location of the bitcoin, the status of their money, and the reasons that the transactions were delayed.

Finance Magnates reported in July that Geoffrey S. Berman, Manhattan US attorney, said, that “Jon Thompson induced investors to engage in cryptocurrency transactions through his company, Volantis Market Making, by touting a transaction structure that would eliminate any risk of loss during the purchase,”

“As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies. Whether a transaction involves cryptocurrency, or any other type of currency, commodity or security, this Office is committed to rooting out fraud and protecting the integrity of our markets.”

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