The Commodity Futures Trading Commission (CFTC) has filed a civil suit against an Ohio man for allegedly running a $12 million bitcoin ponzi scheme to finance his lavish lifestyle. In its statement, the CFTC said Rathnakishore Giri of New Albany, Ohio, posed as a successful crypto trader and owner of SR Private Equity LLC and NBD Eidetic Capital LLC.
He then allegedly convinced over 150 potential investors to hand over $12 million in cash plus at least 10 bitcoins, worth $240,326 today. Through his companies, Giri allegedly promised customers that he would reinvest their money and capital in mutual funds to get them back, but it appears that it was all a lie.
Instead, Giri used the money to buy luxury items
"The complaint also alleges that in their solicitations, the defendants omitted material facts, including misappropriating customer funds to pay profits to other customers in a manner similar to a ponzi scheme, and also embezzling customer funds to pay for Giri's lavish and extravagant lifestyle, which included yacht charters, luxury vacations and luxury shopping,” according to the CTFC.
The CTFC also named Giri's parents, Giri Subramani and Loka Pavani Giri, as defendants in aiding and abetting the possession of funds in which they have no legitimate interest. Giri allegedly told investors that they could withdraw their money from the investment, but this was not true.
The CFTC said it is seeking damages and refunds for all defrauded customers, disgorgement of ill-gotten gains, civil penalties, permanent trading and registration bans and permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA).
and CFTC regulations. Fraudsters seem to be taking advantage of the decentralized ecosystem to perpetrate the art of Ponzi and pyramid scheme fraud. The CFTC has repeatedly warned of potential dangers when working with virtual currencies and advises clients to double-check the company's registration before investing and to be careful when donating money to an unregistered company.
This case illustrates the ever-present threats and dangers and shows that, regardless of asset class, effective enforcement and customer protection must be among the highest priorities.