Utah Man Fined $2.5 Million by CFTC for Leveraged Bitcoin Fraud
The Commodity Futures Trading Commission (CFTC) has recently imposed a hefty fine of $2.5 million on Jacob Orvidas from Utah for orchestrating a leveraged Bitcoin fraud scheme. This fraudulent activity occurred between October 2017 and July 2020. Additionally, Orvidas was charged with failure to register as a commodity pool operator.
The CFTC’s order includes a $2 million restitution and a $500,000 civil monetary penalty against Orvidas.
The CFTC released a statement on Friday, conveying the details of the order. The filing and settlement were carried out simultaneously. Orvidas was found guilty of soliciting funds from traders and operating an unregistered commodity pool. The CFTC stated that Orvidas falsely provided information about the losses incurred and the availability of funds to pool participants.
Participants Suffer Losses Exceeding $2 Million
According to the CFTC press release, Orvidas engaged in fraudulent activities between October 2017 and July 2020. He claimed that he would conduct leveraged Bitcoin trading on behalf of individuals, deceiving them about his trading skills. He also falsely assured pool participants that their investments would result in significant profits. For instance, Orvidas lied about a $100,000 deposit, stating that a client had withdrawn $2.7 million.
As a result of Orvidas’ deceitful practices, pool participants lost more than $2 million. In addition to the restitution, Orvidas has been ordered to pay a $500,000 civil monetary penalty. The CFTC has further issued a cease and desist order to prevent future violations of the Commodity Exchange Act.
Ian McGinley, the Director of Enforcement at the CFTC, stated, “While digital-asset cases are often complex, this bitcoin case is a straight-up fraud: simple and old as time. We will continue to deploy every weapon in our arsenal to fight fraud in all our markets.”
This recent enforcement action by the CFTC follows the regulator’s announcement of charges and settlements against three decentralized finance (DeFi) operators. The Commission found that Opyn, Inc., ZeroEx, Inc., and Deridex, Inc. had violated the law by offering illegal crypto derivatives trading to customers.
Critics within the industry have voiced concern over the CFTC’s regulation by enforcement approach. Jake Chervinsky, Chief Policy Officer of the crypto advocacy group Blockchain Association, expressed his thoughts on the matter on social media.
When executive agencies make up new rules and announce them for the first time in a complaint or settlement, that’s “regulation by enforcement.”
Regulation by enforcement deprives the public of their right to due process under federal law.
Agencies may not care, but courts do.
— Jake Chervinsky (@jchervinsky) September 8, 2023
The CFTC’s Fine on Utah Man for Leveraged Bitcoin Fraud
The Commodity Futures Trading Commission (CFTC) has taken action against Jacob Orvidas, a resident of Utah, imposing a fine of $2.5 million for his involvement in a leveraged Bitcoin fraud scheme. This fraudulent activity occurred between October 2017 and July 2020, during which time Orvidas deceived investors and operated an unregistered commodity pool.
The Details of the Fraud Scheme
Orvidas falsely claimed that he would trade leveraged Bitcoin on behalf of individuals, misleading them about his trading prowess. He went as far as fabricating stories of massive profits, including a fake account of a client withdrawing $2.7 million from a $100,000 deposit. As a result, participants in his scheme lost over $2 million.
CFTC’s Response and Consequences
The CFTC has ordered Orvidas to pay $2 million in restitution to the victims of the scheme, in addition to a $500,000 civil monetary penalty. Furthermore, Orvidas has been issued a cease and desist order, and warned about future violations of the Commodity Exchange Act.
CFTC Taking Strong Measures Against Fraud
The CFTC is determined to combat fraudulent activities in the digital asset space. Ian McGinley, the Director of Enforcement at the CFTC, highlighted the seriousness of this case, stating that Orvidas’ actions were a clear case of fraud. The CFTC will continue to use all available resources to fight fraud and protect investors in all markets.
Criticisms of the CFTC’s Regulation by Enforcement Approach
Some members of the crypto industry have expressed concerns about the CFTC’s approach to regulation through enforcement. Jake Chervinsky, Chief Policy Officer of the Blockchain Association, stated on social media that when government agencies create new rules and implement them through complaints or settlements, it deprives the public of their right to due process under federal law.
It is disheartening to see individuals like Jacob Orvidas taking advantage of innocent investors through fraudulent schemes. The regulatory actions taken by the CFTC are a step in the right direction in holding such individuals accountable and protecting the integrity of the digital asset market. However, it is crucial for investors to remain vigilant and conduct thorough research before entrusting their funds to any individual or organization. Stay informed about the latest news and updates in the crypto industry by visiting [Uber Crypto News](https://ubercryptonews.com).