A federal court Judge in New York has ordered Benjamin Reynolds of Control_finance to pay penalties totaling about $571 million, after finding that he acquired more than 22,000 bitcoin through a fraudulent online scheme. This was announced by the Commodity Futures Trading Commission (CFTC) regulator on Friday.
The bitcoin handed over by more than 1,000 customers in 2017 as part of the alleged scheme was valued at about $143 million at the time, but would now be worth about $1.22 billion. Among other things, Reynolds falsely represented to customers that Control-Finance traded their bitcoin deposits in virtual currency markets and employed specialized virtual currency traders who generated guaranteed trading profits for all customers. He also constructed an elaborate affiliate marketing network that relied on fraudulently promising to pay outsized referral profits, rewards, and bonuses to encourage customers to refer new customers to Control-Finance. In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid them no referral rewards or bonuses. While Reynolds represented that he would return all bitcoin deposits to customers of Control-Finance by late October 2017, he never did and instead retained the deposits for his own personal use. Customers lost most or all of their bitcoin deposits as a result of the scheme.
The CFTC named Benjamin Reynolds, a British national, as the person behind the alleged scheme. But the CFTC didn’t seem to know exactly where Reynolds was, saying in a press statement that he was “purportedly” living in Manchester, England. Reynolds was ordered on March 2 to pay about $143 million in restitution and $429 million in a civil monetary penalty, according to the CFTC statement. The judgement was issued by Mary Kay Vyskocil, a judge in the US District Court for the Southern District of New York. Vyskocil wrote that Reynolds had “failed to appear or answer the Complaint.” The CFTC alleged that Reynolds in 2017 used a website, social networks, and email to solicit about 22,190.542 bitcoin from people around the world. Conducting business under the name Control-Finance Limited, Reynolds collected bitcoin from more than 1,000 people, including about 169 people living in the US, the CFTC said.
JEFFREY NEWMAN REPRESENTS WHISTLEBLOWERS NATIONWIDE. HE CAN BE REACHED AT JEFF@JEFFNEWMANLAW.COM