It is no secret that Bitcoin is on the rise; the cryptocurrency has gained a significant amount of momentum since its introduction to the market in 2009, popular for being the first digital currency that operates without a central bank. Though many seem to be under the impression that it is no more than a fleeting trend, the figures seem to prove otherwise. In March 2017, Bitcoin had a market value of over $25 billion – risen from a mere $8 billion just one year prior. Since its inception, various other cryptocurrencies have been developed due to the apparent opportunity for exponential growth. However, Bitcoin continues to rule over all, with a December 2017 valuation of $18,735 for each Bitcoin. The U.S. Commodities Futures Trading Commission (CFTC) ruled in 2015 that the digital currency is properly defined and lawfully tradable under federal regulations, implying that the market is not readily susceptible to manipulation or exploitation and adopting various measures to ensure its integrity. Even with the CFTC’s diligence, the magnitude of such a profitable market allows for interminable avenues in which fraudulent activity can arise.
Such was found to be the case with Gelfman Blueprint, Inc. (GBI), a New York-based corporation that has engaged in Bitcoin trading and investments since at least January of 2014. In a complaint filed by the CFTC, the company purportedly led a two-year long Ponzi scheme that involved at least 80 clients. To effectively solicit customers, GBI falsified annual reports to inaccurately reflect high return rates when in truth, their records showed the company infrequently participated in trades, most of which were entirely unprofitable. Coupled with their alleged successes, they also claimed to have developed and utilized a unique algorithm, entitled Jigsaw, that allowed them to make high-frequency Bitcoin trades. GBI collected an approximated $600,000 from clients for supposed placement in the Bitcoin commodity pool they claimed to operate. However, the CFTC’s complaint reports that the entire scheme was, in fact, a fraud. The algorithm they claimed to have developed was nonexistent, and, in typical Ponzi scheme fashion, any and all “payouts” to clients were composed solely of other customers’ funds. In efforts to conceal their critical losses and blatant misappropriations, GBI staged a cyber-attack and attested that it drained all funding.
Though the case continues to be pursued and no settlement or liability has yet to be determined, it clearly demonstrates the plausibility of commodities fraud when dealing with an investment opportunity as promising as Bitcoin. The unscrupulous behavior of the corporations which perpetuate such fraudulent schemes prey on those who are interested in virtual currencies, and especially with the constant and exponential growth of the market, their list of potential victims is rapidly expanding. Shortly after filing a complaint against GBI, the CFTC issued an advisory that warns of the dangers of such investments, as well as the volatility of Bitcoin’s value as a whole. Among the information provided is a list of self-advocacy techniques to ensure the validity of any investment opportunity.
Gelfman Blueprint’s case is somewhat of a milestone for the Commodity Futures Trading Commission, as it marks the first federal complaint to be brought against any entity for Bitcoin-related fraud. The CFTC has come under fire for their approval of such cryptocurrencies to be legally traded under the Commodity Exchange Act, with critics claiming that there was insufficient market testing completed before certifying its validity. However, the commission acknowledges the potential dangers of both the currency itself and the opportunities for fraud, as evidenced by their subsequent public warning. They aim to heavily police cryptocurrency commodities trading in efforts to retain integrity in the spot market, working alongside self-regulatory organizations such as the National Futures Association to ensure fair and accurate reporting and, with any luck, inhibit fraudulent behavior altogether.
Whistleblower Justice Network Can Help You
Whistleblower Justice Network partners with whistleblowers in an attempt to expose financial fraud schemes that directly violate the standards of the U.S. Commodity Futures Trading Commission. Utilizing the CFTC’s Whistleblower Program, we work together with whistleblowers to bring forth a powerful and compelling case whilst ensuring the anonymity and protection of our clients. Together, we aim to bring to justice those who employ deceitful tactics in the pursuit of personal gain.
If you have meaningful information about cryptocurrency trading that you believe is in violation of the CFTC, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL, to learn if we can help you.