A New York Federal court has fined the cryptocurrency hedge fund Gelfman Blueprint, Inc, and its CEO Nicholas Gelfman, for more than 2.5 mln USD. the reason is the operation of a fraudulent Ponzi scheme, according to the official announcement that was released on the 18th of October.
GBI is a corporation based in New York, and in 2014, it denominated a bitcoin hedge fund. Already by 2015, the company had around 85 customers and more than 2,367 BTC under its management.
In 2017, there were taken the initial anti-fraud actions by the CFTC against the company. The CFTC charged the company for supposedly fraudulent actions and informed the users that the company has developed a computer algorithm “Jigsaw”, that allowed to produce significant returns through their commodity fund. But the entire scheme was nothing but a fraud.
So, the company CEO has solicited more than 600,000 USD from more than 80 customers. After that, Gelfman played a computer hack, that supposedly caused the trading losses, even though that should not be the case. In the end, almost all customer funds were lost.
Now, the CEO and the company have to pay more than 2.5 mln USD in civil penalties and restitution. From the mentioned sum, GBI and Gelfman have to pay 554,734 and 492,064 USD will be paid as a restitution to customers, and 1,854,000 and 177,501 in civil monetary penalties, respectively.