The Commodity Futures Trading Commission (CFTC) has filed charges against two cryptocurrency fraudsters who impersonated U.S. regulators and forged documents as part of a scheme to steal bitcoin from retail investors.
According to a complaint filed last Friday in the U.S. District Court for the Northern District of Texas, the defendant(s) — operating under the names Morgan Hunt and Kim Hecroft — misappropriated cryptocurrency funds from customers who thought they were investing in bitcoin investment products. Hunt, purportedly from Arlington, TX, ran a business called Diamonds Trading Investment House, while Hecroft, supposedly from Baltimore, operated the business First Options Trading. The CFTC says that Hunt and Hecroft were either working together or that these names are aliases for the same person.
As part of their schemes, the defendants allegedly forged CFTC documents to trick clients into believing that they could not withdraw funds from their bitcoin accounts unless they paid a tax to the CFTC, which in actuality is not a tax-collecting agency. The agency says that Hecroft convinced at least one client to send him BTC under the pretense of fulfilling that tax obligation.
Hunt, meanwhile, had one of his associates impersonate a fictitious CFTC investigator during a telephone conversation with a customer who was skeptical about the supposed CFTC tax. When the client pressed further, Hunt sent the customer a forged document bearing the official CFTC seal.
Commenting on the charges, CFTC Director of Enforcement James McDonald said:
“Increased public awareness of the CFTC’s involvement in policing the virtual currency markets has, unfortunately, provided new opportunities for bad actors. As alleged in the Complaint, Defendants sought to exploit public trust in the CFTC through forged documents purporting to be official CFTC memoranda requiring the payment of a tax on cryptocurrency accounts. The CFTC does not collect taxes. The CFTC is on guard against fraudsters who try to take advantage of the CFTC’s reputation in order to cheat customers, and will take swift action against such misconduct.”
As CCN reported, CFTC Chairman J. Christopher Giancarlo said recently that the CFTC was “very focused” on fraud and manipulation in the cryptocurrency space, particularly since he believes the nascent asset class is “here to stay.”
Recently, the CTFC notched a major victory in their quest to police the cryptocurrency markets, as a U.S. judge formally ruled that the agency has the jurisdiction to prosecute virtual currency fraud.
Read the full CFTC complaint below:
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Last modified: May 20, 2020 5:17 PM