Tag Archives: Bitcoin Trading

Federal Court Orders UK Man to Pay More Than $571 Million for Operating Fraudulent Bitcoin Trading Scheme

The Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a default judgment against Benjamin Reynolds, purportedly of Manchester, England, finding that he operated a fraudulent scheme to solicit bitcoin from members of the public and misappropriated customers’ bitcoin. This case was brought in connection with the Division of Enforcement’s Digital Assets Task Force.

The court’s March 2, 2021 order requires Reynolds to pay nearly $143 million in restitution to defrauded customers and a civil monetary penalty of $429 million. The order also permanently enjoins Reynolds from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC, and trading in any CFTC-regulated markets.

The judgment is the result of a 2019 enforcement action brought by the CFTC charging Reynolds, conducting business as Control-Finance Limited, with fraud and misappropriation. [See CFTC Press Release No. 7938-19]

Case Background

Between May 2017 and October 2017, Reynolds used a public website, various social media accounts, and email communications to solicit at least 22,190.542 bitcoin, valued at approximately $143 million at the time, from more than 1,000 customers worldwide, including at least 169 individuals residing in the U.S. 

Among other things, Reynolds falsely represented to customers that Control-Finance traded their bitcoin deposits in virtual currency markets and employed specialized virtual currency traders who generated guaranteed trading profits for all customers. He also constructed an elaborate affiliate marketing network that relied on fraudulently promising to pay outsized referral profits, rewards, and bonuses to encourage customers to refer new customers to Control-Finance. In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid them no referral rewards or bonuses. While Reynolds represented that he would return all bitcoin deposits to customers of Control-Finance by late October 2017, he never did and instead retained the deposits for his own personal use. Customers lost most or all of their bitcoin deposits as a result of the scheme.

The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.

The CFTC appreciates the assistance of the British Columbia Securities Commission and the UK Financial Conduct Authority. 

The Division of Enforcement staff members responsible for this action are Dmitriy Vilenskiy, Kyong J. Koh, Julia C. Colarusso, Hillary Van Tassel, Jonah E. McCarthy, A. Daniel Ullman II, Luke B. Marsh, and Paul G. Hayeck. Additionally, Daniel J. Grimm and John Einstman contributed to the case while members of the Division of Enforcement. CFTC staff members, Christopher Giglio, Lauren Fulks, and Mary Lutz, also assisted in this matter.