The CFTC Asks Court to Issue Fines in Excess of $100M Against Mastermind of a Fraudulent Crypto Scheme

The Commodity Futures Trading Commission (CFTC) has filed a motion with the New York Southern District Court that seeks heavy penalties against Michael Ackerman, the mastermind of a fraudulent cryptocurrency scheme. According to the motion, the U.S. agency wants the court to order Ackerman to pay $27 million in restitution plus a civil penalty of $81 million.

Additionally, the CFTC wants a default judgment issued against Ackerman after he failed to turn up for the initial motion hearing. The initial motion filing, which the agency filed together with the U.S. Securities and Exchange Commission (SEC), followed allegations that Ackerman had disappeared after raising funds from investors.

According to a report that summarises the case, Ackerman, a former stockbroker, allegedly raised around $33 million from over 150 investors. Ackerman successfully convinced the investors that he would invest a significant part of their funds in the crypto market. The report adds that Ackerman also claimed he would use a “special algorithm that would maximize returns.”

However, in its latest motion, the CFTC says Ackerman did not make good on these promises. The new motion says:

In truth, Ackerman invested no more than $10 million of the $33 million raised from investors in cryptocurrencies and the profits generated by the algorithm were minimal, at best.

Instead of investing the funds as promised, Ackerman is alleged to have used the funds to “purchase and renovate a new home, pay more than $600,000 for personal security services, purchase more than $100,000 worth of jewelry at Tiffany & Co., and purchase three cars.”

Meanwhile, to make his fraudulent scheme appear legitimate, Ackerman allegedly used two entities, Q3 Trading Club, and Q3 I, LP. The CFTC’s new motion also reveals that Ackerman had also resorted to using “doctored screenshots of balances” and falsified information in an effort to conceal the fraud.