The U.S. Commodity Futures Trading Commission (CFTC) has finalized its verdict for the case filed against the Crypto Fund Operators Sam Ikkurty, Ravishankar Avadhanam, and Jafia LLC.
They were accused of violating a part of the Commodities Exchange Act (CEA) relating to cryptocurrency investments.
Let us look more closely at the verdict and all the other details pertaining to the case.
What are the Case details?
The verdict of the long pending case against the Jafia LLC and its owner Sam Ikkurty was finalized on Monday.
The court ordered the defendant to pay $83 million for charges levied against him.
Sam Ikkurty was accused of multiple charges including misleading investors, misappropriating funds, and running his funds in a Ponzi scheme-like manner with help from his carbon offset program.
Looking into his initial charge of misleading investors we find that Sam Ikkurty had used his experience in dealing with digital assets and his alleged success in previous investments to attract investors into his crypto hedge fund.
Upon further investigation, it was found out that even though all of his statements about his previous experience were not false there was still a major omission of the fact that most of his prior experience with digital assets involved him losing most of his invested value followed by his later loss of his own personal Bitcoin assets to a hack.
Ikkurty however managed to raise a large sum through his self-marketing stunt and promising his investors a 15% return on their investment each year.
After raising funds through misleading investors he later went on to make bad investments in unstable assets and ended up losing about 98.99% of the total value of his crypto fund within a few months.
He hid this from his investors and tried to put the facade of a successfully running fund by transferring money from his other raised funds to provide returns to his investors. These forms of fund transfers were what got Ikkurty accused of running a Ponzi-like scheme.
He carried out his Ponzi scheme partly through the funds he raised through his carbon offset program, which he used to pay returns for his other investments to give the same illusion of success instead of fulfilling the purchase of the promised collateral for his carbon offset program.
In addition to all these allegations against him, another accusation raised against him was for his failure to register himself with the CFTC as a commodity pool operator.
So now let us look at what was the verdict from the court about the case.
What was the verdict?
The Court order for the case orders the defendant to offer injunctive relief and a civil monetary penalty for all those who fell victim to their scam.
The court restitution figure amounted to $83,757,249 and an additional fine amounting to $36,967,285 for the ill-gotten claims made through their investments.
The CTFC also put a few things in its verdict for future investors and the victims of the scam alike to be aware of.
Notes from the CTFC
In the later part of the CTFC’s announcement, they also made a mention and restated the often forgotten fact that commodities that fell under the CFTC’s jurisdiction included not just Bitcoin and Ethereum but also other non-Bitcoin virtual currencies such as “OHM” and “Klima” which were classified under the same Bitcoin class.
Another outtake from the CFTC’s response was their reminded that orders to return the funds to investors may not always be a satisfactory verdict for the victims of fraud as the fraudulent entities may not have sufficient funds to return back to its victims and can therefore lead to an unsatisfactory verdict for the victims.
As a cautionary guideline, investors can also find the list of advice that the CFTC issues to any investor to keep them safe and unharmed from such scams.
A few of them are as follows:
- Make sure the company that is offering you the investment idea is CFTC registered.
- Make sure that the details provided by the company and its caretakers including fund managers and its owners are true and correct.
- Furthermore, make sure that the offerings from the company are reasonable and achievable by their market reputation and their published blueprint for execution.
These are a few of the things that an investor must keep in mind before making any investment decision in any form of fund or project to avoid falling for fraudulent or illegitimate projects.
Also, Read: The Rise Of Crypto Scams: How To Spot And Avoid Them?
Bottom Line
In conclusion, one must follow through with the details of the case details and make investment decisions after adhering to the guidelines set forward by bodies such as the CFTC before making an investment so as to not run the risk of losing their assets or money to scams.
