Federal Court Fines Gelfman Bitcoin Fraud

Marco Green
Октября 22, 2018

Crypto hedge fund Gelfman Blueprint, Inc.

According to the information on the company's website, in 2015, the fund had 85 customers.

On Thursday (18 October 2018), the U.S. Commodity Futures Trading Commission (CFTC) issued a press release ("Release 7831-18"), which said that a NY federal court had ordered Bitcoin hedge fund "Gelfman Blueprint" (a New York-based company) and its CEO Nicholas Gelfman to pay over $2.5 million in "civil monetary penalties and restitution" in what was "the first anti-fraud enforcement action involving Bitcoin" filed by the CFTC.

In July 2018, the CFTC claimed a Bitcoin pool operator has fraudulently solicited nearly $500,000 worth of Bitcoin from at least 127 individuals who expected to participate in a pooled investment vehicle for trading commodity interests.

According to James McDonald, director of law enforcement at the US Commodity Futures Trading Commission, this case demonstrated another CFTC victory.

"As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable. I'm grateful to the members of Enforcement's Virtual Currency Task Force for their tireless work on these matters".

Starting in January 2014, the defendants took the monies form investors to be supposedly placed in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by a computer trading program called "Jigsaw". The legal statement concerning the apparent fraud including the promises by GBI for customer profits are fake, and all its claims in the performance reports were false too. Similar to all the Ponzi schemes, these schemes were to lure in the innocent customers to trade their bitcoin in hopes of receiving great profits. The company needed only to persuade investors to invest in the fund.

Yesterday's CTFC press release states that Gelfman Blueprint Inc. and CEO Nicholas Gelfman engaged in fraudulent practices such as hiding trading losses by giving fake performance reports to customers regarding bitcoin trading. Also, the Consent Order finds that Gelfman was liable as a controlling person for GBI's violations, and the Default Order finds that GBI was liable as a principal for the violations of Gelfman and its other officers, agents, and employees. The agency promises to fight back at such schemes and will protect the public and customers by ensuring that the wrongdoers are held accountable.

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