The U.S. District Court, Central District of California ordered five Individuals to Pay Over $5 Million for the Digital Asset Fraud and Misappropriation Scheme.
The development was announced in a press release by the Commodity Futures Trading Commission which revealed relevant details and history of the case.
“ The default judgment order finds Carmona, Arellano, Valdez, and Brend liable for all violations of the Commodity Exchange Act and CFTC regulations alleged in the complaint including that they fraudulently solicited over $1 million from 190 individuals in the U.S. and other countries to supposedly trade bitcoin and other digital asset commodities for them, and for misappropriating customer funds.
They are required to pay jointly and severally over $1 million in restitution to defrauded customers and to each pay a $1 million civil monetary penalty.
The default judgment order also permanently enjoins them from engaging in conduct that violates the CEA, as charged, and permanently bans them from registering with the CFTC and from trading in any CFTC-regulated markets.” The Press release read.
Icomtech Bitcoin Ponzi Scheme
The CFTC release explained that between August 2018 and December 2019, the five defendants were able to convince 190 people to give them their money under the false pretext of investing the money in Bitcoin and other digital assets for them.
The 5 defendants and other Icomtech agents promised their victims daily returns of between 0.9% to 2.8% on their seed money from trading. Additionally, Icomtech would also double the seed money of their customers’ money within eight months.
Investigations revealed that none of this happened and instead, the 5 defendants misappropriated their investor’s funds leading to most of them losing all their money.
Sentencing
On Oct 13, 2022, the U.S. Attorney’s Office, Southern District of New York charged the five defendants with Wire Fraud bringing an end to the legal process for some of the defendants.
Four out of the five defendants were found guilty of Wire Fraud as the indictment against one of the defendants was yet to be resolved.
Carmona was sentenced to 10 years in prison, three years of supervised release, and forfeited over $329,450. Ochoa was sentenced to five years in prison, two years of supervised release, and forfeited $914,000.
Both Defendants were ordered to pay restitution to victims in an amount yet to be determined.
On Dec. 2, Brend was sentenced to 10 years in prison, three years of supervised release, and fined $40,000. The criminal judgment against Arellano one of the defendants is yet to be resolved at the time of the report.
According to the Federal Trade Commission (FTC), $679 million was lost to cryptocurrency fraud in the first half of 2024. Investment scams were the most common type of crypto-related scam, accounting for 46% of all incidents.