Skip to main content
  1. Home
  2. Computing
  3. News

Federal regulators file fraud charges against three bitcoin operators

By

Following an already rough month for bitcoin, three U.S. virtual currency operators have been charged with fraud by the United States Commodity Futures Trading Commission (CFTC). The CFTC alleges that CabbageTech, Entrepreneurs Headquarters Ltd., and one unnamed bitcoin operator have engaged in fraud, misappropriation of funds, and misrepresentation, causing significant financial harm to investors.

The complaint goes on to allege that Patrick K. McDonnell and his company, CabbageTech, doing business as Coin Drop Markets, made false promises to investors. The CFTC alleges that Coin Drop Markets promised bitcoin trading advice to investors as well as bitcoin purchasing and trading on investors’ behalf. The complaint goes on to allege that Coin Drop Markets never delivered on those promises, and investors never saw their money again after handing it over to Coin Drop Markets.

Recommended Videos

“The Defendants here preyed on customers interested in Bitcoin and Litecoin, promising them the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of a supposed expert,” a statement from the CFTC reads. “In reality, as alleged, customers only bought into the Defendants’ fraudulent scheme.”

Related

The second complaint, filed against Dillon Michael Dean and his company, Entrepreneurs Headquarters Ltd., alleges a more complicated Ponzi-type scheme using cryptocurrencies. The CFTC alleges that Entrepreneurs Headquarters Ltd. solicited bitcoin from investors with promises that their investments would be pooled and traded. Instead, the complaint alleges that the company took more than $1.1 million in bitcoin from over 600 investors and promised high rates of return which the company never delivered on. Instead, the company allegedly used investors money to pay other investors, like a high-tech Ponzi scheme.

“Potential pool participants were solicited to invest with Defendants by false claims of trading expertise and promises of high rates of return. The Complaint further alleges that, rather than convert customers’ Bitcoin to fiat currency to invest in binary options contracts, as promised, Defendants misappropriated their customers’ funds, including by using the funds to pay other customers, in the manner of a Ponzi scheme,” a statement from the CFTC reads.

These are the first such actions the CFTC has filed since it initially authorized bitcoin futures trading on December 18, 2017.

Editors’ Recommendations

Topics
Jaina Grey
Jaina Grey
Former Digital Trends Contributor
Jaina Grey is a Seattle-based journalist with over a decade of experience covering technology, coffee, gaming, and AI. Her…
Ethereum vs. Bitcoin: What’s the difference?
ethereum vs bitcoin bitcoinethereum01

Cryptocurrencies can be a little confusing. Are they digital money or more like gold? Are they a new way to pay for things online or a way to store value? Those aren't easy questions to answer when you're talking about hundreds of different cryptocurrencies, some old, some new, and some very different from the rest. When you focus Ethereum versus Bitcoin, though, there are some stark, apparent differences.

Their age is the most obvious, with Bitcoin having entered this world as the very first global cryptocurrency in 2009 and Ethereum only showing up in 2015 as a potential alternative. Although it is less proven than its predecessor, Ethereum does have a few nifty features that give it a lot more potential than its older sibling in some key areas. For this guide, we'll look at two shared aspects of the cryptocurrencies: Their ability to act as a store of value and as transactional mediums. We'll also take a look at some of the unique features which make them stand apart.

Read more
Exclusive: Copilot’s native Spanish is a ‘game changer,’ says Microsoft expert
Lenovo Yoga laptop with Copilot button visible.

AI brands continue to promise more uniform and human-like experiences for their products, and Microsoft is no different. The brand is working to make the features of its AI assistant more cohesive with the everyday world. This includes a more authentic Spanish language voice for its Copilot product. The company rolled out its Copilot Voice feature last October, which it will soon update with native Spanish speaking-voices to cater to the Latino community in the U.S. and globally. 

Enter Elm and Alder, Copilot’s native Spanish voices. The AI can detect when Spanish is being spoken and respond seamlessly in fluent Spanish with a native accent. Similarly, it expresses a native accent while speaking English in the Spanish setting. I spoke with a Microsoft product expert to explore the process behind developing the new voices and the intent behind providing this unique language and cultural representation within Microsoft's AI suite.

Read more
I tried $550 smart glasses with my Mac. They felt better than the Vision Pro
Viture One smart glasses atop MacBook Air.

A lot has been said and written about how Apple missed the mark with its AI efforts. It's pretty obvious that the current status of Apple Intelligence and Siri assistant is functionally way behind what you can accomplish with Microsoft’s Copilot and Google’s Gemini suite. 

Interestingly, Apple also lost the market edge in the wearable XR segment. The company’s first foray was the Vision Pro, an uber-expensive technical marvel that failed to create the same kind of buzz as the company may have expected. 

Read more