The Commodity Futures Trading Commission (CFTC) has filed an enforcement action against two individuals and their companies for a fraudulent digital asset investment scheme.
Based on the complaint, the primary charges against the defendants were for soliciting investors with fake promises of high returns on investments in digital assets and other investment instruments. Additionally, the accused did not register the entities with the market regulator. As a result, they are also charged for operating illegally in the country. The defendants are Ravishankar Avadhanam, Sam Ikkurty, and Jafia LLCm owned by Ikkurty.
Additionally, the funds the defendants owned were also charged. These include Seneca Ventures, Rose City Income Fund II LP, and Rose City Income Fund. According to the filing by the CFTC, the defendants owned the three funds without having any legitimate interest in them.
An Organized Investment Scam
The CFTC noted in the complaint that the defendants have been targeting investors since January last year via several channels. They carried out promotional campaigns over social media and ran a website to support their fraudulent act.
The report revealed that they solicited more than $440 million from 170 investors, promising them high returns from the trading of digital assets, derivatives, commodities, and other investment tools. Additionally, they misappropriated investors’ funds through a Ponzi-styled scheme, without making any pooled investment.
The Defendants Used Investors’ Funds For Personal Gains
After collecting money from investors, the defendants transferred ‘millions of dollars to an offshore account before moving them to a foreign crypto exchange. There, the funds were withdrawn and were not returned to the pool, according to the CFTC.
The regulator has filed for restitution to the affected investors and the disgorgement of all funds gotten illegally by the defendants. The CFTC is also seeking permanent injunctions against the defendants. The US court has ordered the assets of the defendants to be frozen as the CFTC prepares records of their activities. The court has also ordered the appointment of a temporary receiver. The defendants and their entities may also incur permanent trading and registration bans.