The Commodity Futures Trading Commission (CFTC) has filed charges against four individuals – three in Texas and one in Florida. All four of the figures have been accused of defrauding investors through a bitcoin scam that has resulted in more than $1 million in lost funds.
The CFTC Isn’t Playing Around
The CFTC has named the bad actors as Joel Castaneda Garcia, Mayco Alexis Maldonado Garcia, Cesar Castaneda and Rodrigo Jose Castro Molina. The four represented a company known as Global Trading Club (GTC) and mispresented it to investors as a firm that hired master traders with years of experience in the crypto space. Their knowledge and expertise were allegedly put to good use helping the company decide which crypto patterns to follow so they could advise customers about which tokens to invest in.
The truth is that there were no individual traders being utilized by GTC. The company also claimed to be using “cutting edge trading robots” to trade bitcoin for investors at all hours of the week, though these robots also appear to be a fabrication at the time of writing.
The CFTC issued a statement explaining:
Customers were also falsely promising a bonus for referring others, in the form of a multi-level marketing scheme. To conceal their fraud, the defendants caused misleading trading statements to be posted online. The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and the Commission’s regulations, as charged.
Nearly 30 separate investors were believed to have been defrauded or had money taken by GTC, which had been labeled a Ponzi scheme four years ago in 2016 by BehindMLM.com. The publication initially reported that GTC worked to bring investors and whoever they referred onboard as a means of stealing their digital funds.
The crypto space has been wrought with fraud since it first came to fruition. Exchanges such as Mt. Gox and Coincheck – both in Japan – for example, were subjected to some of the largest cyberattacks in the history of digital currency, with the former losing more than $400 million in crypto and the latter losing more than half a billion.
Other methods of stealing people’s digital funds have become more elaborate, such as one incident in September last year that saw fraudulent QR codes developed that sent people’s bitcoins to addresses controlled by hackers and thieves. It is believed that more than $20,000 was stolen via this method.
How This Fraud Can Occur
Researchers involved in uncovering the scam said in an interview:
[As QR] codes are not humanly readable, it opens an avenue for fraud. Fraud can be on the receiver side when generating as shown here, but also on the sender side if the sender is using a rogue wallet or even a good wallet using a rogue QR implementation.