CFTC Brings Charges Against 4 Alleged Operators of $44M Bitcoin Ponzi Scheme

A U.S. federal regulatory agency has filed a civil enforcement action against four individuals it said were involved in the operation of two crypto Ponzi schemes that collectively defrauded investors of $44 million worth of bitcoin (BTC).

The Commodity Futures Trading Commission (CFTC) has charged Florida resident Dwayne Golden, North Carolina resident Marquis Egerton, New York resident Gregory Aggesen and Indian citizen Jatin Patel with fraud for their roles in the alleged scheme.

Separately, the same three U.S. defendants were indicted in a federal court in New York by the Justice Department on criminal charges of wire fraud and money laundering.

During his Senate confirmation hearing last year, CFTC Chairman Rostin Behnam said his agency was ready to become the “primary cop on the beat” for crypto regulation, and reminded the Senate Agriculture Committee the CFTC has “responsibly and aggressively been pursuing enforcement cases in the digital asset marketplace for a number of years.”

Tuesday’s charges are just the latest in the CFTC’s efforts to regulate the crypto industry, the source of its ongoing turf war with the Securities and Exchange Commission (SEC), which has historically taken the lead on U.S. crypto regulation.

According to the CFTC’s complaint filed Tuesday, the four defendants and an unnamed accomplice worked together on two schemes that operated from roughly April 2017 to August 2017.

Golden, Patel and Egerton allegedly ran Ecoinplus (aka Empowercoin), a Ponzi scheme that took in over $23 million in bitcoin (valued at the time of investment), nearly $10 million of which they “misappropriated” and kept for themselves.

Investors were told their money would be invested by “professional traders” and would double in value in 50 to 90 days while accruing at daily payments of at least 2% to 5% of the investment. According to the CFTC, Golden, Patel and Egerton relied on new incoming payments to keep these promises, all while lining their own pockets.

In July 2017, Ecoinplus’s website went offline. Customers did not receive refunds.

Before giving up on Ecoinplus, however, the CFTC alleges that Golden and Patel found a new business partner in Aggeson, a New York entrepreneur, and an unnamed accomplice. Modeling the new site on Ecoinplus (and taking steps to distance themselves from the Ecoinplus scheme), they created JetCoin, according to the regulator.

Aggeson, whose LinkedIn profile lists him as an “internet marketer,” allegedly roped in a crew of “experienced multi-level marketing promoters” who recruited new customers to the scheme.

Much like Ecoinplus, the JetCoin website promised customers a “100% success rate!”, a doubling of their investment in 40 to 50 days, and the accrual of 4% to 5% of their investments daily – all thanks to the investing skills of “the sharpest minds in the industry.”

But JetCoin had no other employees besides Golden, Patel and Aggeson, according to the CFTC.

The defendants allegedly took in $21.7 million in bitcoin from the JetCoin scheme, 36% of which they kept for themselves. The JetCoin website went offline in August 2017 and its customers did not receive refunds.

According to the CFTC complaint, the JetCoin team knew the entire time the system wouldn’t last and that it was only built for “quick money.”

“People who want to sit by and earn money without doing anything … no one believes in that crap,” the unnamed accomplice allegedly told Aggeson, according to recovered voicemails included in the CFTC complaint.

Aggeson responded by saying that “this whole thing about coming in and putting your money into something and making money for nothing, that’s such a joke.”

The CFTC is seeking restitution, disgorgement, civil penalties and permanent bans on registration and trading.

If convicted of the separate criminal charges, the defendants each face up to 20 years in prison.