CFTC orders two Florida men to pay $5.4m in bitcoin fraud settlement

On Thursday, July 6, two men from Florida, the United States, were charged with running a bitcoin scheme worth millions of dollars. They have since settled with the Commodity Futures Trading Commission (CFTC) by agreeing to pay a little over $5 million in restitution.

CFTC press charges, $5 million in settlement reached

The U.S. derivatives market regulator charged Levine and Reichenthal with engaging in digital asset fraud, deceiving investors, and swindling over $5 million intended to purchase bitcoin in 2018.

As part of the settlement, the CFTC has required the two individuals to pay about $5.4 million in restitution. Furthermore, they have been prohibited from trading or registering with the CFTC.

The CFTC found that Reichenthal tricked investors by making false promises to obtain millions of dollars worth of bitcoin from Levine. He pretended to be a licensed attorney and escrow agent and held onto the funds from the investors while claiming that the transaction would happen once conditions were met.

However, the investors eventually learned their goal of acquiring bitcoin was impossible. They were unaware that Levine and Reichenthal had planned to deceive them. When Reichenthal transferred the funds to Levine, no bitcoin was exchanged or disbursed, and the investors’ money was not returned.

CFTC commissioner urges caution against crypto and bitcoin fraud

CFTC Commissioner Kristin N. Johnson took the opportunity to emphasize the prevalence of fraud in the digital asset and cryptocurrency domain.

She urged investors to stay cautious and informed to protect themselves from similar scams.

“Unfortunately, digital commodity asset or cryptocurrency-related fraud has become all too common. Fraudsters often exploit individual retail customers’ fear of missing out and their interest in accessing novel asset classes to perpetrate their scams.”

The charges filed by the CFTC against Levine and Reichenthal followed separate criminal actions taken against them, resulting in legal repercussions. Levine was sentenced to nearly six years in prison.

Reichenthal was given credit for time served, indicating that the period spent in custody leading up to his sentencing was deemed sufficient.

As regulatory bodies continue to address fraudulent activities surrounding cryptocurrencies, investors are advised to exercise caution and conduct thorough research before committing their funds to any investment opportunity.