A New York federal court on October 18, 2018 officially fined the crypto currency hedge fund Gelfman Blueprint, Inc. and its managing director of the same name for their involvement in a pyramid scheme. The total fines amount to more than 2.5 million US dollars.
Bitcoin Ponzi Scheme Founder Slapped with $2.5 Million Fine https://t.co/NA8ntzllZ9 –
New York investment firm Gelfman Blueprint, Inc. (GBI) will see over $2.5 million in fines for fraudulent practices, as filed by the… pic.twitter.com/fZHNNn5AlS
– Crypto Asset Home (@cryptoassethome) 21 October 2018
Hedge fund has been active since 2014
With Gelfman Blueprint, Inc. (GBI for short) is a hedge fund that focuses on the best-known crypto currency Bitcoin. He had been active since 2014 and quickly collected customers. According to its own figures, 85 customers invested more than 2,300 BTC in the following year. As it turned out, not everything went as smoothly as the website wanted to suggest to its visitors. Rather, it now became official that it was a large snowball system that was behind the hedge fund. This was ruled by a New York federal court after GBI had been extensively investigated over a long period of time.
With over $2.5 million in fines for GBI and CEO Nicholas Gelfman, the court responded to the results of the investigation, which began with the official opening of the investigation by the U.S. Commodity Futures Trading Commission (CFTC) in September 2017. The snowball system is said to have been maintained from 2014 to 2016. The investors were promised an algorithm called “Jigsaw”, with which it should be possible to achieve significant profit from investments in a commodity fund. The investigators uncovered the fraud and thus effectively prevented that also investors with interest in the Bitcoin course become victims of the scam.
#Bitcoin fund fined $2.5 million – https://t.co/KV3SvUTrYX #coinatory #Cryptocurrency #Fraud #GelfmanBlueprint #PonziScheme #Regulations #Scam pic.twitter.com/1Ewm1yAC2a
– Coinatory (@Coinatory) 20 October 2018
Over $600,000 stolen from at least 80 customers
Now what are the exact figures in terms of investors’ losses? According to reports, GBI stole over $600,000 from at least 80 customers. With a computer hack, Gelfman concealed the losses of automated trading from his customers. This ultimately led to the loss of all user investments. It is a positive case for all investors in digital currencies and should act as a deterrent to the many other attempts to pull money out of customers’ wallets. CFTC Executive Director James McDonald expressed his satisfaction with the ruling: “This case is another victory for the Commission in the virtual currency area. As the chain of cases shows, the CTFC is determined to filter out black sheep in virtual currency markets and hold them to account.”
The mentioned chain was recently supplemented by two further cases from the crypto world. Two fraudsters were convicted in Texas, who sold Bitcoin through customer deception and brought further assets to their customers under false conditions. In the case of Gelfman Blueprint, Inc. and Nicholas Gelfman, the fines ultimately amounted to over 2.5 million US dollars. Of this amount, $554,734.48 and $492,064.53, respectively, are to be paid to the affected customers as compensation. Furthermore, civil penalties were imposed by the court. While GBI has to pay an amount of $1.854 million, the sum in the case of the managing director is $177,501..