After several years of investigation and court proceedings, the US District Court for the Southern District of New York granted a request by the CFTC to fine the mastermind behind a multi-million-dollar Bitcoin scam.
According to an official press release issued by the CFTC. The Court ordered Benjamin Reynolds, owner of Control-Finance LTD, to pay more than $572 million in compensation for his fraudulent activities regarding a Bitcoin scam.
Another Multi-Million Dollar Bitcoin Scam From 2017
As the CFTC recounts, Reynolds ran the Bitcoin scam operation from at least May 1 through October 31, 2017. His business promised —like many other scams— a stable and guaranteed profit to those who invested their Bitcoin in his custody services.
Control-Finance assured its customers that their money would be actively managed with various trading operations. It also promised to hedge funds against price fluctuations upon depositing their Bitcoin in the company’s wallet.
Reynolds also used Ponzi scam techniques and pyramid market promotion to grow his Bitcoin business at an exponential rate.
He promised various rewards and bonuses to those who attracted new customers. The CFTC explains that he used a referral scheme in which rewards were allocated according to new enrollees who came through links specifically created for the client.
The CFTC explains:
The defendants marketed and concealed their fraud through an elaborate pyramid scheme they called the Control-Finance “Affiliate Program.” Through the Affiliate Program, the defendants fraudulently promised to pay, in the form of Bitcoin, escalating referral profits, rewards, and bonuses to “Affiliates,” or persons who referred new customers to Defendants.
Control-Finance’s promises were very appealing and ranged from returns of 1.5% per day or 45% per month to risk management based on fundamental analysis and strategic investments.
But in reality, Reynolds received the money and invested it in absolutely nothing; instead, he simply transferred it between different wallets to simulate some kind of activity. When a client requested a withdrawal, he merely used other clients’ funds in a Ponzi scheme to cover his profits.
When the situation became untenable, and customers began to demand refunds, Reynolds promised to pay by late October 2017 but failed to deliver on his promise: Instead, he used the funds for his own benefit.
Where (And Who) is Benjamin Reynolds?
Thanks to the scam, Reynolds got 22,190.542 bitcoin, valued at approximately $143 million at the time, from more than 1,000 customers worldwide. The CFTC acted on the name of 169 individuals residing in the U.S.
Following the investigation, the CFTC identified at least 169 victims and indicted Reynolds on fraud and misappropriation charges. The Court also ordered Reynolds to pay nearly $143 million in restitution to defrauded customers and a civil monetary penalty of $429 million —which is where the total of $572 million comes from.
Apparently, Benjamin Reynolds may be a fugitive or at least living outside of the U.S. The CFTC does not say specifically where he is based and does not even claim to know his true nationality.
Considering the mysterious status of Reynolds’ whereabouts, people have started to come up with different theories. One is that Benjamin Reynolds is not actually a real person, and the public face known as Mr. Raynolds is actually an actor. Some even speculate it could actually be a standup comedian and Poker player with a major resemblance to what Benjamin Reynolds looked like on social media.
However, such accusations have not been proved by the authorities.
So it appears that although the case is nearing its end, Reynolds’ victims will still have to wait to receive their funds. If they do, that is.