CFTC charges Rathnakishore Giri with $12m Bitcoin ponzi scheme

“Identifying and policing fraud in these emerging markets may be difficult or delayed in light of the agency’s limited visibility in these markets”, said CFTC Commissioner Kristin Johnson.

The Commodity Futures Trading Commission has charged Rathnakishore Giri and his Ohio-based companies NBD Eidetic Capital, LLC and SR Private Equity, LLC, with defrauding more than 150 customers over $12 million and at least 10 BTC.

According to the complaint, the defendant and his companies misappropriated customer funds intended for digital asset trading. His parents were charged as relief defendants for being in possession of funds to which they have no legitimate interest.

Ponzi scheme paid for Giri’s lavish lifestyle

The CFTC found that, from approximately March 2019 through the present, the defendants made numerous false and misleading statements in their solicitations to customers, including, guarantees of profits, and Giri’s supposed success as a digital asset trader.

The defendants also allegedly told customers they would have the ability to withdraw their initial investment and alleged profits at any time, which was false, and omitted material facts, including the misappropriation of customer funds to pay profits to other customers in a manner akin to a Ponzi scheme.

The scam also paid for Rathnakishore Giri’s lavish lifestyle, which included yacht rentals, luxury vacations, and luxury shopping, the financial watchdog continued, concluding that the fraud amounted to over $12 million and more than 10 bitcoins.

Novel financial products may create new challenges

CFTC Commissioner Kristin N. Johnson commented on CFTC’s injunctive action in the Southern District of Ohio against Rathnakishore Giri and his companies.

“While the CFTC rigorously surveils markets and enforces regulations in accordance with its mandate to protect customers, novel financial products may create new challenges. Identifying and policing fraud in these emerging markets may be difficult or delayed in light of the agency’s limited visibility in these markets.

“It is imperative that all market participants understand that such conduct will be subject to enforcement actions in accordance with our mandate. Recent attraction to digital assets and cryptocurrency market firms proclaiming high yields or promising instant wealth, but obscuring deceptive schemes that borrow from long-prohibited behavior is deeply concerning. While there are many benefits to responsible innovation, customers must remain vigilant.

“Fraudsters who seek to take advantage of an unsuspecting public will exploit popular interest in innovative financial technology and perpetrate scams that separate investors from their hard-earned money. This case illustrates these dangers, underscores the ever-present threats, and demonstrates that—no matter the asset class—effective enforcement and customer protections must be among our highest priorities”, CFTC Johnson added, as she praised the work of the Enforcement team, namely Dmitriy Vilenskiy, Karen Kenmotsu, Luke B. Marsh, and Paul G. Hayeck.