CFTC Files $429M Penalty Against Çontrol Finance Operator

The Commodity Futures Trading Commission (CFTC) has had its hands full with the case of Benjamin Reynolds, the founder of U.K.-based crypto Ponzi scheme Control Finance. Despite an inability to find him, the financial watchdog is moving ahead with its fraud case.

Justice Must Be Served

Earlier this week, the CFTC filed with a court to allow it to grant a $429 million penalty against Reynolds. The action is coming amid the agency’s inability to physically locate Reynolds, as the scammer has repeatedly refused to answer court invitations.

The CFTC’s case against Reyolds began last year. At the time, the watchdog claimed that Reynolds and Control Finance misappropriated about 22,858 BTC (worth $147 million at the time) from over a thousand investors since May 2017. 

A formal complaint from the CFTC added that Control Finance got investors to deposit Bitcoins with them. The company had promised investors daily returns on deposits through trading activities, while it was no more than a Ponzi scheme that robbed one user to pay another.

Suddenly, Control Finance went dark. Its website and social media pages went blank in September 2017, and the company kept investors waiting despite promising to settle its debt to them. Instead, Reynolds and other top company officials merely laundered its funds and went to ground.

Despite attempts to find Reynolds, however, the agency has been unable to get him physically. In January, Finance Feeds reported that it filed a motion with the New York Southern District Court, asking for the service of process on Reynolds and extending the sixty-day limit to effect the service on him and his firm.

In April, it filed with the court again, informing that it had so far attempted to serve Reynolds at two of his associated residences. However, the agency learned from some company investors that Reynolds could have been situated in Korea. The agency also filed a notice of voluntary dismissal without prejudice against Control Finance.

Given that Reynolds has so far been a no-show, it calls to question how the CFTC hopes to enforce the $429 penalty. If Reynolds can deny a court, nothing stops him from denying an imposed penalty too.

Scammers at Large

Reynolds isn’t the only scam operator to have gone AWOL. The U.S. government is also dealing with the case of Ruja Ignatova, the mastermind behind the OneCoin scam. Ignatova and her company defrauded investors of about $5 billion, but she managed to flee her Belarus home before authorities could get to her.

For years, she has remained out of sight, as her company unravels and her co-conspirators take the fall. So far, authorities have managed to get Konstantin Iagnatov, the scammer’s brother, and OneCoin’s co-founder. Ignatov was apprehended last year at the Los Angeles International Airport while trying to flee the country. He has cooperated with authorities since then.

Amongst other things, Ignatov helped in the prosecution of Mark Scott, a New York attorney who helped Ignatova launder $400 million. He also recently agreed to testify in court against his sister in exchange for his name being taken off a class-action from OneCoin’s investors.

 However, he is still the principal subject in a case from the United States Department of Justice (DOJ). He’s on the hook for money laundering and fraud, and he could face up to 90 years in prison if found guilty.