CFTC Charges Icomtech Operators With Fraud

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  • Five operators of the Icomtech scam have been accused of running a Ponzi scheme by the CFTC
  • Icomtech promised US investors daily returns and luxury prizes if they invested and recruited other investors
  • The operators made and misappropriated “hundreds of thousands of dollars” from the enterprise

The Commodity Futures Trading Commission (CFTC) recently charged the operators of the Icomtech platform with running an “old-school Ponzi scheme” masquerading as a crypto investment vehicle. The five men allegedly targeted Spanish-speaking US citizens and duped them into handing over “hundreds of thousands of dollars”, which the CFTC is now attempting to reclaim. More than 170 individuals were targeted by the Icomtech scam, with the scammers targeting those more susceptible to the promise of riches.

Icomtech Promised Daily Returns

The complaint, filed last week, claims that between August 2018 and December 2019, the defendants and other agents associated with Icomtech used deceptive practices to persuade both current and potential customers to provide them with funds to invest in cryptocurrencies. In true Ponzi scheme fashion, the defendants also promised customers that Icomtech would generate daily returns ranging from 0.9% to 2.8, and that their investments would be doubled within approximately four to eight months.

Marketing materials promised exceptional returns, commissions, and referral bonuses.  One presentation promised that customers could obtain “bonus points” earned for recruiting others to invest, which could be used to “obtain prizes, including iPhones, Rolex watches, trips (to Las Vegas, Hawaii or Dubai), luxury cars (e.g., a Mercedes Benz), or exchange for as much as $20,000 in cash.”

However, the CFTC claims that this was all a ruse and that no trading actually took place:

As alleged in the complaint, in actuality, the defendants did not trade Bitcoin or other digital asset commodities for the customers as they said, and did not earn daily returns nor double the customers’ investments based on trading. Instead, the defendants misappropriated the customer funds, and some customers lost all of their money.

CFTC Commissioner Kristin N. Johnson said that the crypto investment scam was nothing new, stating that, “Despite the high-tech gloss, Defendants are accused of engaging in garden variety fraud and running an old-school Ponzi scheme.”

The CFTC’s charges come on the back of action taken against the Icomtech founders last year, with saw all five charged with wire fraud by the U.S. Attorney’s Office for the Southern District of New York.