A U.S. federal court has placed a restraining order on and frozen the assets of four alleged promoters of deceptive schemes involving cryptocurrencies at the request of the country’s Federal Trade Commission.
US Court’s Order
The U.S. Federal Trade Commission (FTC) announced on Friday that a federal court has shut down “promoters of deceptive cryptocurrency schemes” at its request. The FTC is an independent agency of the U.S. government. Its goal is to promote consumer protection and prevent anti-competitive business practices.
The U.S. District Court for the Southern District of Florida has “halted the activities of four individuals who allegedly promoted deceptive money-making schemes involving cryptocurrencies,” the agency wrote, adding that:
These schemes falsely promised that participants could earn large returns by paying cryptocurrency such as bitcoin or litecoin to enroll in the schemes.
Furthermore, the federal court has “issued a temporary restraining order and frozen the defendants’ assets pending trial,” also at the FTC’s request.
According to the agency’s complaint filed with the court, the defendants violated “the FTC Act’s prohibition against deceptive acts by misrepresenting the chain referral schemes as bona fide money-making opportunities and by falsely claiming that participants could earn substantial income by participating in the three schemes.”
Bitcoin Funding Team and My7network
Three of the four defendants allegedly “promoted chain referral schemes known as Bitcoin Funding Team and My7network,” the FTC detailed. Thomas Dluca, Louis Gatto, and Eric Pinkston allegedly used websites, Youtube videos, social media and conference calls to promise “big rewards for a small payment of bitcoin or litecoin,” the agency noted, adding:
The defendants claimed that Bitcoin Funding Team could turn a payment of the equivalent of just over $100 into $80,000 in monthly income.
However, the FTC asserted that this setup would benefit only a few participants while the majority of them would fail to even recoup their initial investments. Furthermore, the two schemes’ participants “could only generate revenue by recruiting new participants and convincing them to also pay cryptocurrency.”
In Bitcoin Funding Team, participants must pay an initial bitcoin payment to an earlier participant and a fee to the scheme to be eligible to recruit new member and receive payments from them. In addition, “Promoters claimed participants could earn bigger rewards if they paid additional bitcoins,” the FTC described. Acting Director of the FTC’s Bureau of Consumer Protection, Tom Pahl, commented:
This case shows that scammers always find new ways to market old schemes, which is why the FTC will remain vigilant regardless of the platform – or currency used…The schemes the defendants promoted were designed to enrich those at the top at the expense of everyone else.
The fourth defendant, Scott Chandler, promoted Bitcoin Funding Team “and another deceptive cryptocurrency scheme, Jetcoin,” the FTC alleged. This scheme “promised investors a fixed rate of return on their initial bitcoin investments as a result of bitcoin trading” in addition to a recruitment scheme, the FTC described, adding:
In a series of promotional calls, Chandler claimed Jetcoin participants could double their investment in 50 days. In reality, the FTC complaint alleges, the scheme failed to deliver on these claims and ceased operation within two months of launching.
What do you think of the federal court shutting down promoters of deceptive schemes involving cryptocurrencies? Let us know in the comments section below.
Images courtesy of Shutterstock and the FTC.
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