CFTC Files First Case Against Bitcoin Fraudsters

The Commodity Futures Trading Commission (CFTC) has filed its first-ever charges against a Bitcoin investment corporation. The company, Gelfman Blueprint, Inc. (GBI), owned by Nicholas Gelfman of Brooklyn, New York, has been accused of fraudulent statements regarding Bitcoin investments.

The company apparently had been running a Ponzi-scheme from 2014 through 2016, telling investors that it had created a computer algorithm called ‘Jigsaw’ which allowed for substantial returns through a commodity fund. In reality, the entire scheme was a fraud.

Substantial losses

The scam apparently bilked more than 80 individuals of sums nearing $600,000. The defendants consistently had reported substantial gains, providing investors with falsified returns reports, all the while spending the funds personally. The CFTC’s Director of Enforcement James McDonald said:

“Through its work across the Commission, the CFTC has demonstrated its continued commitment to facilitating market-enhancing FinTech innovation. Part of that commitment includes acting aggressively and assertively to root out fraud and bad actors in these areas. As alleged, the Defendants here preyed on customers interested in virtual currency, promising them the opportunity to invest in Bitcoin when in reality they only bought into the Defendants’ Ponzi scheme. We will continue to work hard to identify and remove bad actors from these markets.”

 The CFTC has already shown pro-Bitcoin leanings, granting LedgerX the right to create a regulated Bitcoin futures market and otherwise remaining aloof from crypto activities. This anti-fraud action is a welcome one for genuine Bitcoin investors and fund managers alike.