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Cryptogambling / CFTC takes legal action against Fundsz for crypto fraud

CFTC takes legal action against Fundsz for crypto fraud

Publish Date: 14/08/2023
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The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Fundsz and their four founders, alleging that the unincorporated blockchain organization ran a deceptive scheme involving cryptocurrency and precious metals trading.

The charged individuals are Juan Pablo Valcarce from West Melbourne, Florida, Rene Larralde from Melbourne, Florida, Alisha Ann Kingrey from Franklin, Arkansas and Brian Early from New Orleans, Louisiana.

According to a complaint filed at a Florida district court, these individuals had allegedly been making false and misleading statements to investors since October 2020.

They portrayed Fundsz as a profitable venture that could generate steady profits of more than three percent per week using a “proprietary algorithm.” Moreover, they claimed a $2,500 investment could grow to $1 million in just 48 months.

The CFTC also alleges that the accused created false weekly returns. The organization did not trade customer funds but fabricated profits. Using “revolutionary” blockchain technology, Fundsz claims to help individuals, charities and institutions collect sustainable income.

The four individuals are also accused of misrepresenting Fundsz as a charitable organization. They used the tagline “Fundsz For Your Cause” to suggest that contributing to Fundsz would support humanitarian causes. To date, the solicitation has garnered over 14,000 clients.

Assets frozen by court

The CFTC has filed a motion for a preliminary injunction against Fundsz. A hearing will take place on August 23, 2023.

Before the hearing, U.S. District Court Judge Wendy Berger signed an ex parte statutory restraining order that temporarily freezes the defendants’ financial assets. A temporary receiver has also been appointed.

Through these proceedings, the CFTC seeks to restore justice to defrauded investors by pursuing restitution, recovering ill-gotten gains, imposing monetary penalties, as well as permanent trading and registration bans and obtaining a permanent injunction against further violations of the Commodity Exchange Act (CEA).

However, the commission warns that orders requiring wrongdoers to repay funds to victims may not always result in the recovery of lost money. It is because the fraudsters may not have sufficient funds or assets to compensate the victims.

“The CFTC continues to root out individuals who defraud customers in the cryptocurrency and precious metals markets,” said CFTC Director of Enforcement Ian McGinley.

Although fraudsters frequently change their tactics to attract investors, McGinley reminded customers that “if something sounds too good to be true, it probably is.”

Previous crypto fraud cases

This case is not the first instance where the CTFC has delved into matters regarding crypto fraud. Previously, the regulatory agency brought attention to former Wall Street broker Michael Ackerman, who was indicted of operating a fraudulent scheme that solicited funds from innocent individuals and entities.

At the end of July, the commission filed a complaint in the U.S. District Court for the Middle District of Tennessee against Michael and Amanda Griffis. The CFTC accused the defendants of defrauding over 100 people across the country. The defendants operated a multi-million dollar commodity pool scheme from July 2022 to January 2023. The agency also alleged the defendants of misappropriating about $1 million of pool funds for personal use.

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