What has happened?
The Commodity Futures Trading Commission (CFTC) has charged two defendants with alleged fraudulent solicitation and fraud.
What does this mean?
In a press release, the CFTC has announced that it had charged two people, using the names Morgan Hunt and Kim Hecroft, with fraudulently soliciting bitcoin from the public through false or misleading representations "to invest in trading products including leveraged or margined foreign currency contracts (forex), binary options, and diamonds".
The complaint also alleges that the defendants forged account statements, impersonified a CFTC investigator and forged CFTC documents, bearing the image of the CFTC's official seal and supposedly authored by the agency's general counsel.
James McDonald, CFTC Director of Enforcement, said:
"Increased public awareness of the CFTC’s involvement in policing the virtual currency markets has, unfortunately, provided new opportunities for bad actors."
"As alleged in the Complaint, Defendants sought to exploit public trust in the CFTC through forged documents purporting to be official CFTC memoranda requiring the payment of a tax on cryptocurrency accounts. The CFTC does not collect taxes."
The two defendants are said to have defrauded at least two customers between January 2017 and now.
The CFTC complaint alleges various counts of misrepresentation, including the claim that customers could not withdraw their investment without paying a tax.
One customer transferred bitcoin to Hecroft "under the pretence of paying a tax".
The regulator is seeking restitution to those who have been defrauded, disgorgement of gains, civil monetary penalties, trading and registration bans and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.
Hunt is supposed to be from Texas and may be doing business as Diamonds Trading Investment House, and Hecroft is supposed to be from Maryland and may be doing business as First Options Trading.
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