Crypto Ponzi Scammer Ordered to Pay $2.5 Million for Duping Investors
On October 18, the U.S. Securities and Exchange Commission (SEC) ordered a New York-based firm Gelfman Blueprint, Inc. and CEO Nicholas Gelfman to pay $2.5 million in fines and restitution for running a Bitcoin Ponzi scheme. The indicted Nicholas Gelfman and his company presented false investor reports to other investors assuring them of profits.
Brought to Book
Interestingly, this is not the first time a regulatory body has sued the CEO. Last year, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil fraud charge against the same individual. At the time, the CFTC had insisted that Gelfman ought to waive his right to his fifth amendment privilege against self-incrimination. However, fortunately for the alleged scammer, the judge allowed him a reprieve.
For those who missed out on the news, the judge asked the CFTC to proceed with their arguments; however, the judge also suggested that the accused get counsel regarding his rights on the fifth amendment. The amendment says:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
As per the report from the CFTC, Gelfman allegedly took money from prospective investors to the tune of $600,000 from approximately 80 persons. The money was supposedly collected for placement in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by Gelfman’s computer trading program called “Jigsaw.”
First of a Kind Case
Gelfman’s fine is supposedly the first Bitcoin-related fraud case where an alleged guilty person has been tried for duping investors. Not just that, but Gelfman admitted to his crimes and refrained from filing an appeal in response to the charges laid out against him by the by the Southern District of New York.
However, a particular section of the general public stated that he might not be able to pay up the funds, as he is short of the required capital.
As great as the judgment was, it is essential to know this is neither the first nor the last case of its kind in the United States of America. There will undoubtedly be more cases like Gelfman’s. But at the moment, it is important to remember that the sooner the SEC comes up with regulatory guidelines, the better it will be for investors in the space.
Do you think that a massive slap by SEC will set an example for others to avoid Ponzi schemes? Let us know your thoughts in comments.