CFTC Charges Multiple Firms for $15 Million Crypto and Binary Options Scam

U.S. and Israel-based firms were charged for promoting fake investment schemes and defrauding customers of $15 million.

The Commodity and Futures Exchange Commission (CFTC) has charged executives of American and Israeli firms for an alleged $15 million scam involving cryptocurrencies and binary options. 

Court documents filed on May 5 mention two major scams, the first involving binary options, which was carried out between October 2013 and November 2016, and the second involving digital assets, such as Bitcoin (BTC) and Ether (ETH), which was carried out between November 2013 and August 2018.

The CFTC charged Israel-based Tal Valariola and Itay Barak of Digital Platinum Limited for aiding the United States-based firm All In Publishing (AIP) to create and promote numerous misleading investment schemes to U.S. and foreign investors. 

Throughout the allegedly misleading marketing campaign, as many as 51,917 news users opened a binary options account and deposited a total sum of nearly $13 million. Additionally, 8,043 users opened digital assets trading account, depositing a total of over $2 million. 

Creating fake customer success stories

Daniel Fingerhut of All In Publishing allegedly relied on fake customer success stories that showcased lavish lifestyles of investors trading on AIP’s partner platforms. The CFTC claims that DPL agreed to post the advertisements, despite knowing of the misleading information presented in the ad campaigns.

According to an email from 2015, AIP had spent as much as $50,000 to produce videos for the marketing campaigns during the binary options scam. 

The CFTC stated that, during the digital asset solicitation campaign, the companies were using at least five email auto-responders, each with a database of approximately 200,000 emails. 

“Fingerhut hired, directed, and/or supervised at least four individuals in Florida and one individual in Israel to write solicitation emails and disseminate them in bulk through autoresponders.”

The CFTC is charging the defendants on four counts including options fraud and CTA fraud, in addition to seeking a variety of injunctions banning them from commodities business-related activities. The commission has also asked the court to order financial disgorgement.

Publication date: 
05/07/2020 - 12:35
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