The U.S. Commodity Futures Trading Commission (CFTC) has charged a man from Miami, Florida and two men from Israel with "two massive fraudulent solicitation schemes" involving binary options and other digital assets including bitcoin and ethereum.
What happened?
The CFTC alleged that the defendants made over $20 million by fraudulently soliciting millions of customers and prospective customers with marketing campaigns to entice them to open and fund off-exchange trading accounts that traded foreign exchange currency pairs, metals and digital assets through websites operated by unregistered binary options and digital asset brokers.
What does this mean?
According to the CFTC press release, charges have been filed against Daniel Fingerhut of Miami, Florida, and three companies he worked with, Florida corporation Digital Platinum, Inc, Israeli company Digital Platinum, Ltd and Bulgarian company Huf Mediya Ltd, as well as the operators of the three companies Tal Valariola and Itay Barak of Israel.
The complaint alleges that from at least October 2013 to August 2018, the defendants created fraudulent marketing materials that promised "astronomical profits with no risk of loss" and used spam emails and online videos to promote the fake trading accounts.
The defendants received over $20 million in commission payments after more than 59,000 customers opened and funded the trading accounts as a result of the fraudulent marketing campaigns.
It is alleged the marketing materials contained fake trading performance using advertised binary options and digital asset trading software and systems. Marketing videos featured actors posing in front of mansions and private jets and falsely claiming they had become rich by trading.
Fingerhut is also charged with making materially false or misleading statements to CTFC staff, including under oath, to hide the extent of his role in the fraud and to avoid producing documents. The complaint is related to another filed multimillion-dollar retail binary options fraud action.
The CFTC is seeking full restitution to defrauded individuals, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
