Judge Rules 2 Obscure Altcoins as Commodities in $120M Ponzi Scheme

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Key takeaways:

  • In a crypto Ponzi case, an Illinois district court judge declared two lesser-known altcoins commodities, siding with the CFTC.
  • In addition to Olympus (OHM) and KlimaDAO (KLIMA), which the order states also qualify as commodities, these included Bitcoin and Ether.

In a crypto Ponzi case, an Illinois district court judge declared two lesser-known altcoins to be commodities, siding with the Commodity Futures Trading Commission (CFTC).

Sam Ikkurty, an Oregonian, and numerous of his businesses were involved in the Ponzi scheme. Through investments in “digital asset commodities,” victims were tricked into believing they would receive “steady returns” of 15% annually.

In addition to Olympus (OHM) and KlimaDAO (KLIMA), which the order states also qualify as commodities, these included Bitcoin and Ether. The CFTC stated:

“Those virtual currencies fall into the same general class as Bitcoin, on which there is regulated futures trading,”

The governance token of Klima DAO, a decentralized autonomous organization that positions itself to address “coordination” issues in the field of climate financing, is called KLIMA.

According to CoinGecko data, KLIMA is currently trading for approximately $3.55, down 99.9% from its all-time high of $3,777 on October 21, 2021.

The OlympusDAO, a group dedicated to developing a community-owned decentralized reserve currency, uses OHM as its governance token.

The CFTC claimed in a statement dated July 3 that Ikkurty had given prospective participants the impression that he exclusively invested in reliable crypto assets and had created success tales about his past to reassure them.

But rather than paying out earnings to investors, Ikkurty “ran something like a Ponzi scheme,” purposefully hiding the fact that his fund’s value dropped by almost 98.99% in months and continuously misrepresented the fund’s performance.

The order also discovered that Ikkurty gave early investors a large portion of the money to shield them from losses. Investors in the alleged carbon offset program lost out on $20 million due to this.

Ikkurty had lost all of his personal Bitcoin assets due to a cyberattack, the CFTC also claimed.

Judge Rowland ordered Ikkurty to pay $36.9 million in disgorgement and more than $83.7 million in restitution.

In May 2022, the CFTC initially charged Ikkurty and Ravishankar Avadhanam with fraud and neglecting to register with their organization.

According to the CFTC, the two solicited more than $44 million from at least 170 individuals to trade crypto, derivatives, and commodity futures contracts using a website, YouTube videos, and “other means.”

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