The U.S. Commodity Futures Trading Commission (CFTC) has successfully recovered $18 million worth of cryptocurrencies linked to an alleged commodity pool pyramid scheme.
The scheme, orchestrated by Oregon resident Sam Ikkurty, involved defrauding investors through a so-called “crypto hedge fund.”
According to the CFTC, Ikkurty deceived investors by promising to make a “net profit,” but failed to do so. In reality, the fund’s performance fell 98.99% in months, a fact Ikkurty concealed from his investors. The CFTC’s findings revealed that Ikkurty invested in volatile digital asset commodities, contrary to his assurances, and that his claimed crypto expertise was a fabrication. The agency noted that Ikkurty’s actual experience with digital assets consisted of losing his personal Bitcoin in a hack.
U.S. District Court Judge Mary Rowland of the Northern District of Illinois ordered Ikkurty and several affiliated entities to pay a total of $209 million, including approximately $84 million in customer restitution, approximately $37 million in restitution of illicit profits and approximately $110 million in civil penalties. Ikkurty was also assessed a criminal contempt award exceeding $14 million.
“While the defendants promoted their schemes as cutting-edge crypto and carbon investments, in reality they were old-fashioned pyramid schemes,” CFTC Enforcement Director Ian McGinley said in a statement regarding the case.
*This is not investment advice.
