The Commodity Futures Trading Commission filed a complaint in the U.S. District Court for the Southern District of Texas against four individuals for fraudulently soliciting funds from customers to speculate in Bitcoin price movements. According to the complaint, from August 2016 through October 2017, the ‘Global Trading Club (GTC)’ was portrayed as employing ‘master traders’ with years of experience in ‘crypto currency’.
The GTC promised to trade Bitcoin for its customers 24 hours a day, 7 days a week, using ‘cutting edge trading robots’. Additionally, customers were promised that increases in their deposits would lead to better earnings and would receive a bonus for referring others. The complaint alleges that 27 customers deposited at least $989,000 with one or more representatives of GTC.
GTC Cryptocurrency Seminars Targeted Korean, Spanish-Speaking Individuals
The complaint provides details of how the defendants hosted Bitcoin seminars that targeted individuals who spoke Korean and Spanish. In September 2016, one of the defendants spoke to members of a Korean-American church at a luncheon in Santa Maria, California. Spanish-speaking prospects in Miami, Los Angeles, Las Vegas, and Houston were targeted in seminars.
Billed as the best way to trade with no experience, the marketing materials of GTC included in italics, ‘Put your bitcoin to work for you’. The complaint alleges that no trading robots were created or used, and that no experienced traders were employed by GTC. The complaint names three defendants from Texas including, Mayco Alexis Maldonado Garcia, Cesar Castaneda, Rodrigo Jose Castro Molina, and one defendant from Florida, Joel Castaneda Garcia.
The CFTC is asking for disgorgement and civil money penalties, based on the alleged fraud that falls into the jurisdiction of the agency as a result of ‘Bitcoin’ being considered a commodity. With digital assets such as Bitcoin encompassed by the definition of a commodity, the CFTC has jurisdiction in this case related to alleged violations of fraud, misleading statements, and the, “…use or employ, or attempt to use or employ, any manipulative device, scheme, or artifice to defraud”.