The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal civil enforcement action against Nicholas Gelfman, of Brooklyn, New York, and Gelfman Blueprint, Inc. (GBI), a New York corporation, charging them with bitcoin fraud.
The complaint has been filed in the U.S. District Court for the Southern District of New York. The CFTC has charged Gelfman and GBI with fraud, misappropriation, and issuing false account statements in connection with solicited investments in digital currency bitcoin. The CFTC alleges that from January 2014 to January 2016, GBI and Gelfman, company CEO and Head Trader, operated “a Bitcoin Ponzi scheme in which they fraudulently solicited more than $600,000 from approximately 80 persons.”
Further in order to hide trading losses and misappropriation, Gelfman and GBI provided fake performance reports to the participants, including statements that created the appearance of positive Bitcoin trading gains. According to the CFTC, the defendant’s trading account records show only infrequent and unprofitable trading.
Furthermore, Gelfman also staged a fake computer “hack” designed to conceal trading losses and misappropriation.
“As alleged, the Defendants here preyed on customers interested in virtual currency, promising them the opportunity to invest in Bitcoin when in reality they only bought into the Defendants’ Ponzi scheme. We will continue to work hard to identify and remove bad actors from these markets,” James McDonald, the CFTC’s Director of Enforcement, said.
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