CFTC Charges Denari Capital & Co, with $8.3 Million FX Fraud

The fraudsters managed to con at least 28 participants, the CFTC alleges.

The United States Commodity Futures Trading Commission (CFTC) announced on Tuesday that it had filed a complaint against defendants Travis Capson, Arnab Sarkar, and their California-based company, Denari Capital, LLC for committing an $8.3 million foreign exchange fraud.

The complaint was filed in the U.S. District Court for the Northern District of California. Specifically, the complaint charges the defendants with fraudulently soliciting more than $8.3 million from at least 28 participants

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The US regulator is seeking disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, and CFTC regulation.

CFTC allegations against defendants

Capson of Utah and Sarkar of California collected this money through a pooled investment scheme, which included leverages or margined off-exchange forex. Furthermore, Capson has been charged with making false statements to the National Futures Association (NFA).

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Since at least 2012 until now, according to the CFTC’s complaint, the defendants pooled and commingled the funds of their victims into Denari bank accounts and used the funds for a number of purposes. This includes forex trading, real estate, securities transactions, and personal expenses.

“Capson and Sarkar fraudulently solicited participants and prospective participants by willfully or recklessly making material misrepresentations concerning the past profitability of Denari’s forex trading and the profits its participants were making,” the statement from the US regulator said. 

“The defendants also allegedly issued false account statements to participants that misrepresented the profitability of their respective interests in the pool.” 

Because of the nature of the business, the defendants were required to register with the CFTC. However, according to the complaint, Denari and Capson did not register until May 1, 2019. Sarkar, on the other hand, never registered.

During an examination conducted on July 15, 2019, by the NFA, Capson made false representations to the regulator, the complaint alleges. In particular, Capson said that Denari traded only proprietary funds and concealed its trading of customer funds.

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