Bitcoin in Focus as CFTC Issues $572 Million Fine for Crypto Ponzi Scheme – DailyFX


Bitcoin, CFTC, Crypto Fraud, BTC/USD – Talking Points

  • CFTC announces $572 million fine to UK Bitcoin fraudster
  • Bitcoin continues higher despite the US regulatory action
  • Crypto assets face scrutiny from central bankers, regulators

Benjamin Reynolds, the spearhead of a massive Bitcoin Ponzi scheme uncovered by the US Commodity Futures Trading Commission (CFTC) in 2019, has been ordered to pay $572 million in damages for his illicit dealings. A US district court ruled that Reynolds must pay those defrauded as a penalty and restitution for running a pyramid scheme called Control-Finance Limited.

In a 2019 complaint, the CFTC reported that Reynolds acquired nearly 22,000 Bitcoin from over 1,000 investors. The current market value of the stolen Bitcoin stands at over $1.3 billion. Reynolds’ team promised investors a guaranteed return of 1.5% per day, and returns were later fabricated in trade statements.

While Reynolds indicated that he would return the Bitcoin to his investors, he laundered the crypto-assets through a series of layered blockchain transactions, where the funds ultimately wound up in bank accounts in various tax havens.

According to reports, the Control-Finance scheme operated between May 2017 and October 2017. Since that period, the value of bitcoin has appreciated from $2,900 to $59,000.

BTC/USD Daily Chart

btcusd chart

Chart created with TradingView

Bitcoin has come into focus in recent weeks, with Federal Reserve Chair Jerome Powell commenting on the recent rise in the value of the digital asset. Powell said that Bitcoin is a “speculative asset” in nature and that the coin is “highly volatile and therefore not really useful stores of value.” Treasury Secretary Janet Yellen opined on the ethical uses of bitcoin, focusing on cryptocurrencies being used to fund terrorist and other illicit activities.

Despite clear opposition from central bankers, Bitcoin continues to climb. Despite hovering just below all-time highs, Bitcoin bulls argue that additional stimulus coming out of Washington in the coming months will only propel valuations higher. The focus is set to remain on the divisive asset, as calls for decentralized finance face stern words from lifelong bureaucrats.

— Written by Brendan Fagan, Intern for DailyFX

To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter

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