On Thursday, the Commodity Futures Trading Commission (CFTC) announced that it had filed a civil lawsuit against an Oregon and Illinois resident, as well as a Florida company for fraudulently soliciting at least $44 million in investments in digital assets.
The CFTC specifically named Sam Ikkurty a/k/a Sreenivas I Rao (OR), Ravishankar Avadhanam (IL) and Jafia LLC, a Florida-based company that Ikkurty also owns in its action.
In the complaint, the defendants are accused of operating an illegal commodity pool and failing to register as a commodity pool operator. In addition, the Complaint further alleges three funds owned and operated by the Defendants as “Redress Defendants” in possession of funds in which they have no legitimate interest – Ikkurty Capital LLC d/b/a Rose City Income Fund , Rose City Income Fund II LP (Rose City) and Seneca Ventures LLC.
According to the CFTC, the scheme dates back to January 2021, when the defendants allegedly used YouTube videos and websites to obtain more than $44 million from more than 170 participants “to buy, hold and trade digital assets, materials commodities, derivatives, swaps and commodity futures.
Rather than investing the participants’ mutual funds as depicted, the complaint says the defendants instead misappropriated those funds by distributing them to other participants – like in a Ponzi scheme. The defendants also allegedly transferred part of the funds to offshore accounts under their control and for their benefit.
CFTC issues asset freeze order
The commission obtained an ex parte order to freeze the assets under the control of the defendants and appointed a temporary receiver to keep the records.
A hearing in the case will be held on May 25, 2022. The CFTC has issued several customer protection notices Fraud Reviews and Articles which provide the warning signs of fraud, including one to inform the public of the possible risks associated with investing or speculating in virtual currencies or recently launched Bitcoin futures and options.
The CFTC hopes to reimburse all victims of the scheme. He’s also asking for other penalties, including fines and permanent bans.
U.S. Agencies Deepen Law Enforcement
With this lawsuit, the CFTC has continued to show its position in protecting consumers and investors from bad actors, joining other federal agencies to help better regulate the cryptocurrency space.
President Biden’s executive order has given US agencies more impetus to research the crypto industry to better protect US citizens. Indeed, the SEC has already promised to impose strict oversight measures on the crypto sector.
The Consumer Financial Protection Bureau (CFPB) has also announcement that it intends to issue the Consumer Financial Protection Circulars for regulators to enforce federal consumer laws. The recent crypto market crash has also heightened the interest of lawmakers and regulators across the country.
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