The U.S. Commodity Futures Trading Commission (CFTC) has charged a man from Colorado with fraud and failing to register with it in respect of a scheme that involved Ponzi-type payments.

What has happened?

According to the CFTC press release, a civil enforcement action was filed against Breonna Clark, of Denver, Colorado, and Venture Capital Investments Ltd, a Colorado limited liability company, with fraudulently soliciting clients to trade foreign currency contracts (forex), bitcoin and other digital assets through a commodity pool run by the defendants. They are also charged with misappropriating at least $418,000 for Ponzi-type payments and using the funds for personal expenses.

What does this mean?

The complaint alleges that from March 2018 to June 2019 the defendants ran the fraudulent trading scheme, using social media, email, webinars, instant messaging and face-to-face meetings touted as 'financial seminars' to get people to join.

The defendants allegedly received $534,829 from at least 72 individuals. Instead of using the funds to trade, they misappropriated at least $418,000,  using this for Ponzi-type payments to other pool participants and for personal expenses.

The complaint also alleges that the defendants fraudulently solicited prospective customers by misleading them about their experience, expertise and investment track record while promising future profitability trading forex and digital assets.

To conceal the alleged misappropriation and trading losses, the defendants sent participants false account statements showing inflated trading gains, lied about the availability of participants' funds and made Ponzi-type payments.

The defendants also failed to appropriately register with the CFTC.

The CFTC is seeking restitution to defrauded customers, disgorgement of the ill-gotten gains, monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations.

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