Initial Bitcoin-Associated CFTC Implementation Action Wins 2.5 Million Dollar Judgement
On 16th October this month, Nicholas Gelfman who is the CEO of Gelfman Blueprint Inc was ordered to pay $2.5 million in compensation and penalties.
The order was handed down by a Federal Court in New York and was supposed to be implemented immediately. This was an effective culmination of the CFTC initial Bitcoin-associated anti-fraud implementation act.
Gelfman Blueprint Obtains Money Through Illegal Means
Between 2014 and early 2016, Gelfman Blueprint Inc obtained 600,000 dollars of investments from 80 customers. These resources were used to fund Jigsaw. This is an in-house high-frequency exchange algorithm.
Though, the execution reports were misleading, and payouts of benefits to customers originated from new ventures from different customers, which makes this nothing but your typical Ponzi sheme. The time of 2014 through 2016 corresponded with a Bitcoin bear market, and Gelfman Blueprint Inc. was generally unprofitable. The Ponzi plot fell apart when a deceptive conspiracy was organized to make it to seem like all client reserves had been stolen.
Gelfman Blueprint and its chief officer were charged by the CFTC for embezzling customer’s money. They were also accused of engaging in accounting malpractice hence misleading the investors about the true nature of the situation. The company was instructed to compensate clients with 1.07 million dollars. The company was further instructed to pay a further $2.031 million in fines for engaging in such illegalities.
However, CFTC has announced that despite the judgement, the company might not have the resources necessary to compensate the clients and to pay its fines. Therefore, Gelfman was prohibited from taking part in future monetary activities within the CFTC jurisdiction.
Additionally, the ruling lacked any criminal penalties for Gelfman despite the fact that he defrauded the public out of 600,000 dollars. Therefore, the judgment appeared to be very lenient toward the corporation as it had committed a serious crime.
Gelfman Blueprint Fined
The fines imposed on the company show the commission’s intentions of bringing sanity to the digital money business. The CFTC is now ready to identify who ignores market regulations and to hold them accountable for their actions.
The virtual taskforce has also shown its willingness to resolve these market challenges. These joint efforts among the stakeholders might assist in going a long way toward eliminating fraud overseen by the entity.
Initially, the SEC was the only regulator overseeing cryptocurrency transactions but this case shows that the CFTC is capable of performing enforcement actions involving crypto. The CFTC considers crypto and Bitcoin as digital assets that fall under their jurisdiction. Conversely, the SEC considers most securities and cryptocurrencies to be under their control.
This demonstrates that the law is not clear on which regulatory authority should monitor this specific category of currencies. Bitcoin is devolved and is considers to be a security of its own. Though, the SEC continues to monitor Bitcoin products in the market. The regulatory bodies should stiffen regulations to try to eliminate fraud in the industry.