The US Commodity Futures Trading Commission (CFTC) has indicted two US residents and their companies for operating a digital currency investment scheme that defrauded at least 170 investors.
In an official press release, the CFTC named the defendants as Sam Ikkurty aka Sreenivas I Rao (Ikkurty) of Portland, Oregon; Ravishankar Avadhanam of Aurora, Illinois; and Jafia LLC, a company owned by Ikkurty in Florida.
The CFTC complaint alleges that the two solicited more than $44 million from their victims beginning in January 2021. They claimed that they would use investor funds to buy, hold and trade digital assets, materials commodities, derivatives, swaps and commodity futures, using a website, YouTube videos and other means to attract participants.
In reality, the two were running a Ponzi scheme where they embezzled the pooled funds. Some of the funds were transferred to accounts and entities belonging to both, as well as an offshore entity that may have converted some of them into digital currency.
“The Complaint further alleges that instead of investing the Participants’ Pooled Funds as depicted, the Defendants misappropriated the Participants’ Funds by distributing them to other Participants, in a scheme-like manner. Ponzi scheme,” the press release read.
The CFTC also accuses the pair of “operating an illegal commodity pool and failing to register as a commodity pool operator.” Three funds owned and managed by the two are also named in the indictment.
The case so far
So far in the case, United States District Court Judge Hon. Mary Rowland signed a ex parte legal restraining order to freeze the assets of the two. The CFTC says it is seeking to compensate defrauded investors.
Defendants will also likely obtain “civil monetary penalties, permanent trade and registration bans, and a permanent injunction against further violations of the Exchange of Commodities Act (CEA) and CFTC regulations.”
In a similar DOJ case reported by CoinGeek, the defendant was sentenced to three years in prison for embezzling $5 million in a digital currency scam.
The CFTC recently doubled down on its commitment to strengthen enforcement related to digital currency. CFTC Chairman Rostin Behnam says the body is looking to follow SEC steps to increase the staffing of its digital currency enforcement unit, as reported by The Wall Street Journal (WSJ). .
Meanwhile, the SEC has appointed about 30 new staffers for its Crypto Assets and Cyber Unit. In statements to Congress last week, SEC Chairman Gary Gensler cited the importance of unity as one of the reasons for the proposed increase in the commission’s budget.
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