Two Companies Charged $15 Million For Running Crypto And Binary Options Scams

The US Commodity and Futures Exchange Commission (CFTC) has charged the executives of two companies for alleged involvement in scams with cryptocurrencies and binary options. Both fraudulent activities had misleading marketing campaigns claiming to bring quick and significant profits regardless of any price movements.

CFTC Charges New Scams

Per the document released earlier this week, two massive fraudulent solicitation schemes occurred between October 2013 and August 2018. The first one involved binary options, which began operations in 2013, and it shut down in November 2016.

The CFTC charged Tal Valariola and Itay Barak of Digital Platinum Limited (DPL) for willingly aiding a firm named All In Publishing (AIP) to create and promote numerous misleading investment schemes.

One of the promises made included offering free access to systems trading binary options automatically on behalf of the customers once they opened and funded an account with a recommended broker.

Additionally, the fraudulent projects ran other classic marketing schemes. For instance, Daniel Fingerhut of AIP admitted that he created numerous fake customer success stories, claiming to had won thousands of dollars in days. An email from 2015 showed that AIP previously spent about $50,000 to produce a video with fake testimonies during the binary options scam.

The CFTC alleged DPL for posting the advertisements, despite knowing they contained misleading and fraudulent information.

Bitcoin And Ethereum Involvement

In October 2016 began operations the second part of fraudulent activity, which included cryptocurrencies – most often Bitcoin and Ethereum. Relying again on misleading ads, the perpetrators marketed an automated trading system, claiming that it guarantees profits “regardless of what happened to the price of Bitcoin and without the customer needing to purchase any coins.”

Numerous sales videos further showed screenshots of completed transactions that purported to reflect trading in cryptocurrencies with massive profits.

The document shows that Fingerhut had admitted that all emails he wrote for DPL were based on fictional accounts. The CFTC has attached one of those emails Fingerhut sent to a potential customer as an example. It reads:

“You see, there’s a system that will deliver results no matter how high or low Bitcoin goes… I estimate that if you start now in a month, you can be sitting on at least $20k.

And don’t be intimidated. You do NOT need any previous experience or any tech skills. The system does 100% everything for you. It is so easy to make money from this anyone can do it, including you. You start right now, by this time tomorrow you will have the money already in your account ready to be spent. Yes, it works that easy.”

Ultimately, the CFTC estimated that in total, the perpetrators deceived customers for approximately $15 million. Thus, the Commission issued several charges including options and CTA fraud. The CFTC also seeks a variety of injunctions banning them from getting involved in any commodities business-related activities.