The CFTC has charged a Bitcoin scam including 3 Texas men and 1 Florida man in a digital asset scheme. In recent developments, the Commodity Futures Trading Commission has filed a complaint in the U.S District Court ( Southern district of Texas ) against a small team of Bitcoin “master traders” that were soliciting funds in a fraudulent manner. The group of individuals affiliated with “Global Trading Club,” are believed to have raked in $989,000 from customers.
Bitcoin Scam – Trading Robots
The Commodity Futures Trading Commission has recently filed a complaint in the U.S District Court ( Southern district of Texas ) against Bitcoin “master traders” that affiliated with a group called “Global Trading Club.” According to the filing, it is believed that 4 members from Global Trading Club solicited funds in a fraudulent manner from 27 different clients. In doing so, the Bitcoin scam was able to amass $989,000 in customer deposits.
From August 2016 until October 2017, members of GTC were soliciting funds for the Bitcoin scam, telling people that Bitcoin deposits would be traded 24 hours a day and 7 days a week. GTC said their investing infrastructure included top tier trading bots that produced high earnings, especially if customers were depositing high dollar amounts.
How GTC Brought In Clients
Aside from GTC compensating customers who referred others, it is believed that GTC was taking in investment capital from people that attended their crypto seminars. Global Trading Club targeted individuals that had no trading experience at all. With crypto investing still being foreign to many people across the globe, GTC made it sound easy, and built value through a proposed trading robot that was on autopilot.
Most of the crypto seminars had targeted Korean and Spanish speaking individuals. Aside from hosting seminars at traditional locations such as hotels, GTC targeted untraditional locations, such as a California Korean-American church in September 2016. Other locations included Hawaii, Las Vegas, Houston, and others.
False Claims
During the period outlined above, the defendants promoted GTC through various avenues such as:
- The website www.gtcexchange.com
- Various YouTube videos
- Mobile app called GTC Digital
- Facebook page called Global Trading Club
According to the filing by the CFTC, the defendants never used any trading bots, despite telling their customers they were doing so. In addition, capital deployed by the customers was never being traded in real time environments. GTC also creating misleading account statements that were generated online. The reports that customers were viewing online displayed misleading information regarding the actions being taken by GTC with customer deposits.
Some of the information GTC misrepresented included:
- the number of “master traders” it was employing
- how frequently customer deposits were being invested
- daily earning payouts
- bonuses paid out for referrals
What The CFTC Is Asking For
Based on the landscape of the Bitcoin scam, the CFTC is seeking disgorgement and civil money penalties. With Bitcoin being classified as a commodity, the alleged fraud belongs to CFTC jurisdiction, pertaining to misleading statements, and alleged violation of fraud. The defendants include Texas residents Mayco Alexis Maldonado Garcia, Cesar Castaneda, and Rodrigo Jose Castro Molina, and a Florida resident Joel Castaneda Garcia.
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