CFTC seeks $572 million in penalty and restitution from the owner of 'fraudulent' bitcoin scheme Control-Finance

The U.S. Commodity Futures Trading Commission (CFTC) is reportedly seeking $572 million in penalty and restitution from the owner of "fraudulent" bitcoin trading scheme Control-Finance.

FinanceFeeds reported the news on Friday, citing a proposed default judgment filed by the CFTC with the New York Southern District Court on Thursday. Per the judgment, Control-Finance owner and sole director Benjamin Reynolds will have to pay $429 million in penalty and $143 million in restitution, as he failed to appear or answer the CFTC’s complaint originally launched in June 2019.

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Reynolds is accused of having misappropriated at least 22,858.822 bitcoins — worth at least $147 million at the time, and now worth more than $270 million — from more than 1,000 customers through a pyramid scheme called the Control-Finance “Affiliate Program.”

During 2017, Reynolds fraudulently collected bitcoin deposits from customers and promised them trading returns of up to 45% per month. “In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits,” the CFTC said in the complaint at the time.

According to Thursday’s proposed default judgment, Reynolds will also be permanently prohibited from trading bitcoin.

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.