CFTC Imposes $54M Default Judgment in Crypto Fraud Scheme

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Key takeaways:

  • The CFTC declared that Alliance, Ohio, resident was the subject of a permanent injunction given by default judgment.
  • Ackerman is required to pay a $27 million civil monetary penalty.

The Commodity Futures Trading Commission (CFTC) declared on June 28 that Alliance, Ohio, resident Michael Ackerman was the subject of a permanent injunction given by default judgment from Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York. 

Ackerman is currently forbidden from engaging in any trading operations within CFTC-regulated markets and cannot apply for a CFTC registration. In addition to these limitations, the judgment orders Ackerman to pay $27 million in compensation to those who were harmed by his deceptive digital asset trading operation.

Ackerman is also required to pay a $27 million civil monetary penalty as a significant financial punishment for his involvement in the fraudulent enterprise.

Ackerman is charged with running a fraudulent enterprise that used fictitious claims to obtain money from people and organizations. He is accused of misappropriating the majority of the cash for personal use or of continuing the fraudulent trading operation rather than spending them for the stated purpose. 

The CFTC initiated the investigation on February 11, 2020, after Ackerman was charged with planning a complex fraud that ran from August 2017 to December 2019. According to the accusation, Ackerman ran the plan to raise money for trading digital commodities but ended up stealing the money.

It is said that around 150 people and organizations gave Ackerman a total of at least $33 million. Surprisingly, of the deposited monies, less than $10 million was really used for trading, with the remaining money being unlawfully siphoned for personal use or to keep the fraudulent scheme going.

The CFTC commissioner, Christy Goldsmith Romero, suggested reducing Bitcoin anonymity during a keynote address at City Week 2023 in London as a strategy to reduce the risks connected with digital assets. Romero emphasized the value of collaboration between the government and the sector in addressing the appeal of cryptocurrencies for illegal money. 

She emphasized that to maintain market integrity, national security, and financial stability, controlling the risks associated with digital assets is essential. Romero stressed the necessity of addressing the issue of identity verification to reduce the risks associated with criminal funding on the Bitcoin market, particularly given the usage of mixers and technology that increases anonymity, which raises many potential problems.

Recently, a British hacker named Joseph O’Connor, also known online as PlugwalkJoe, was sentenced to five years in jail in the United States for his involvement in the April 2019 SIM swap attack that resulted in the theft of cryptocurrency valued at $794,000.

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