CFTC Charges Crypto Fraudsters in Three US States

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The Commodity Futures Trading Commission (CFTC) recently made headlines by bringing a lawsuit against residents in Florida, Louisiana, and Arkansas for alleged fraudulent crypto trading.

The CFTC Fraud Allegations

The CFTC’s complaint, filed in the US District Court for the Middle District of Florida, focuses on four individuals namely Rene Larralde of Melbourne, Florida, Juan Pablo Valcarce of West Melbourne, Florida, Brian Early of New Orleans, Louisiana, and Alisha Ann Kingrey of Franklin, Arkansas, as well as their unincorporated entity Fundsz.

The complaint charges them with fraudulent solicitation, accusing the defendants of engaging in deceptive practices to attract clients for purported trading in cryptocurrencies and precious metals.

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Nature of the Alleged Fraud

The CFTC noted in its complaint that the defendants enticed potential participants with bogus claims about Fundsz’s supposed trading prowess. 

Specifically, the alleged fraud claimed that Fundsz, using a secret “proprietary algorithm,” had historically achieved weekly returns of more than 3% by trading cryptocurrencies and precious metals. This enticing narrative, complete with references to a special sauce, attempted to persuade individuals of the entity’s great trading powers.

Furthermore, the defendants claimed that they had made on-time and precise payments for the previous seven years. They also made the daring assertion that a $2,500 contribution to Fundsz could balloon into a startling $1 million in 48 months, with no more deposits required. 

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Adding another layer of deception, the defendants attempted to elicit charitable sentiments by marketing Fundsz under the banner “Fundsz For Your Cause,” giving the impression that contributions to Fundsz would benefit noble causes such as health initiatives, education, and disaster relief.

The Illusion of Success

Surprisingly, the defendants’ sophisticated pitch yielded fruit, attracting over 14,000. However, the CFTC’s complaint paints a bleak image behind the scenes. It claims that Fundsz did not engage in any genuine trading activity with customer funds. 

Instead, the defendants are accused of producing fictitious weekly results in order to create the appearance of development and success. In truth, any returns attributed to participants were a fantasy, since the monies supposedly stayed untouched and uninvested.

CFTC’s Legal Objectives

Consequently, US District Court Judge Wendy Berger has issued an ex parte statutory restraining order, effectively freezing the defendants’ assets and preserving records that might be essential to the ongoing investigation. 

Additionally, the regulator is requesting civil monetary penalties as a punitive measure in order to deter future wrongdoing and emphasize the severity of the defendant’s actions. 

Notably, the update comes only shortly after the CFTC filed charges against a Tennessee couple for operating a similar fraudulent crypto scheme. These unfolding legal battles underscore the importance of regulatory vigilance and the commitment to investor protection in the crypto space.

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