The Commodity Futures Trading Commission (CFTC) has fined a man from Utah, Jacob Orvidas, over $2.5 million for his involvement in a leveraged Bitcoin fraud scheme. The CFTC announced the order on Friday, stating that Orvidas had conducted the fraudulent activities between October 2017 and July 2020.
Orvidas was charged with soliciting money from traders and running an unregistered commodity pool. The CFTC revealed that his fraudulent activities included lying about the losses suffered by participants and the availability of their money.
According to the CFTC press release, Orvidas promised to trade leveraged BTC on behalf of the participants, falsely representing his trading skills. He also deceived them by claiming that their investments would generate substantial profits. For instance, he allegedly lied about a $100,000 deposit that resulted in a client cashing out $2.7 million.
As a result of Orvidas’ actions, pool participants lost over $2 million. In addition to the hefty fine, Orvidas will also have to pay a $500,000 civil monetary penalty. The CFTC issued a cease and desist order and cautioned Orvidas against future violations of the Commodity Exchange Act.
Ian McGinley, the director of Enforcement at CFTC, emphasized the agency’s commitment to fighting fraud in all markets, stating, “While digital-asset cases are often complex, this bitcoin case is a straight-up fraud: simple and old as time.”
This recent enforcement action by the CFTC comes shortly after the regulator filed charges and settled orders against three decentralized finance (DeFi) operators for offering illegal crypto derivatives trading to customers. The CFTC has faced criticism for its regulation by enforcement approach in the crypto industry.
Market experts and industry players have raised concerns about the lack of due process in the CFTC’s approach. Jake Chervinsky, Chief Policy Officer of the crypto advocacy group Blockchain Association, voiced his criticism on Twitter, stating, “Regulation by enforcement deprives the public of their right to due process under federal law.”
Overall, the CFTC’s fine against Jacob Orvidas for his leveraged Bitcoin fraud scheme sends a clear message that fraudulent activities in the cryptocurrency market will not be tolerated. The regulator is determined to protect investors and ensure the integrity of the market through enforcement actions and penalties.