Benjamin Reynolds, a renown crypto trader from the United Kingdom, has been compelled by the U.S. federal court in New York to pay $572 million for conducting a Bitcoin Ponzi scheme.
The U.S. District Judge, Mary Kay Vyskocil, approved the U.S. Commodity Futures Trading findings and passed a ruling early March that Reynolds had committed fraud and ordered him to pay $143 million in compensation and $429 million as a penalty.
The default ruling, reported today in Westlaw Journal, transpired after Reynolds failed to adequately answer U.S. Commodity Futures Trading Commission accusations in June 2019.
How Reynolds Scammed investors?
As per the complaint, Reynolds, the director of the defunct trading industry Control-Finance Ltd. persuaded over 1,000 clients, with at least 169 of them being U.S. citizens, to cumulatively deposit 22,858 Bitcoins betwixt May and October 2017. Those dockets were worth $143 million; thus, the $143 million in compensation is now worth closer to $1.3 billion.
Buyers moved their Bitcoin to Control-Finance, knowing that its specialists would trade it. Raynolds promised customers rewards for referring other clients in addition to their profits.
The U.S. CFTC said that Control-Finance and Raynolds did not recruit expert bitcoin analysts, and investigation revealed that they did not buy and sell Bitcoin in the clients’ interests, pay criterion rewards or bonuses, and retained customers’ Bitcoin deposits for their personal use.
In October 2017, Reynolds then closed down the operation and tried to dry clean the Bitcoin by undertaking thousands of circuitous blockchain transactions.
In 2019, Raynolds’ location remained unknown to the U.S. authorities forcing them to make reports in the British newspaper asking him to appear in court. The discernment, however, paves the way for the U.S. Commodity Futures Trading Commission to go after Reynold’s US-based assets in addition to asking the United Kingdom Court to enforce the ruling.