Today, the Commodity Futures Trading Commission (CFTC) announced charges against two individuals and four entities for engaging in a fraudulent scheme involving binary options and a virtual currency called “ATM Coin.” The CFTC also alleges that the defendants improperly accepted customer funds without first registering with the CFTC. Earlier this week, the United States Attorney for the Eastern District of New York filed a parallel criminal action against one of the defendants.
The CFTC’s complaint, filed on April 16, 2018, names Blake Harrison Kantor, Nathan Mullins, Blue Bit Banc, Blue Bit Analytics, Ltd., Mercury Cove, Inc., and G. Thomas Client Services as collaborators in a common enterprise designed to effectuate the scheme. The complaint claims that the defendants-none of whom were properly registered with the CFTC-have for years solicited customers to engage in illegal off-exchange binary-option transactions. The defendants allegedly induced these customers by falsely promising significant returns.
The complaint further alleges that the defendants misappropriated customer funds for their own private use. The defendants attempted to conceal their misdeeds by encouraging customers to convert their account balances to ATM Coin and subsequently misrepresenting the value of the customers’ ATM Coin holdings.
The CFTC is seeking restitution, disgorgement, civil monetary penalties, and permanent registration and trading bans against the defendants. Kantor also faces criminal charges related to the scheme, including allegations that he lied to the FBI and ordered the alteration of relevant documents.
“As this action shows, the CFTC is continuing its efforts to root out fraud in our markets, said James McDonald, the CFTC’s Director of Enforcement. “To achieve this goal, we will work closely and in parallel with our law enforcement partners, which is particularly important in cases like this one, where the Defendants allegedly sought to make their fraudulent scheme more difficult to detect by stretching it across multiple markets, including a virtual currency known as ATM Coin.”
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