The Commodity Futures Trading Commission (CFTC) filed a complaint today against Armen Temurian and Vista Network Technologies (Defendants), in the U.S. District Court for the Eastern District of New York.  The complaint alleges that Defendants lured investors into their fraudulent digital asset scheme by promising to trade the Bitcoin and Ether that investors deposited and ensure a daily 2.5% return.  These fraudsters also promised that investments would “double in value within eighty days.”  Once more and again, false promises, fake investments, and disturbing losses suffered by unsuspecting investors.

In total, investors transferred over 750 Bitcoin and 2,000 Ether to Defendants worth more than $7 million.  Defendants never traded a single digital asset entrusted to them by investors.  They never developed investment strategies nor identified investment opportunities.  There was no basis for their claims that they could achieve the promised returns.  Instead, Defendants deployed a scam that we have long described as a plain, old, Ponzi scheme—taking the money of new investors, distributing new investors' money to existing investors, and recharacterizing the misappropriated investment funds as “profits.”

In a recent statement related to a different matter,[1] I explained:

This age-old sleight of hand gained its contemporary moniker “Ponzi scheme” from the 1920’s financial fraud perpetuated by Charles Ponzi.[2]  For proof of the enduring and pernicious legacy of fraudsters such as Ponzi and his predecessors, recall the revelation of Bernie Madoff’s $50 billion Ponzi scheme.[3]  Prosecutors continue to work today—a decade after Madoff confessed that his investment advisory fund was “all just one big lie” —to compensate victims.[4]

I have long been concerned about the potential for fraud in digital asset markets.[5]  While we will continue to serve as a cop on the beat policing markets for anti-fraud and market manipulation in accordance with our statutory authority, it is imperative that all members of the public to stay informed about the potential scams and abuses in digital assets markets by visiting our investor advisory page.[6] Fraudsters offering guaranteed, or unusually high, returns—or both—should in particular prompt scrutiny and additional diligence before transferring any funds.

I would like to recognize the Division of Enforcement staff bringing this litigation:  San Wasserman, Katie Rasor, Mike Cazakoff, Steven Ringer, Lenel Hickson, Jr., and Manal Sultan.