The CFTC Unravels a $147M Crypto Ponzi Scheme Called Control-Finance

The crypto boom of 2017 gave rise to a number of fraudulent crypto schemes who pretend to be legit crypto projects but are, in fact, nothing more than mere Ponzi schemes.

Their usual game is to deceive unsuspecting crypto enthusiasts and investors into investing with them and then disappearing with the funds once the cryptocurrency’s price hits a peak. The same technique was used by a deceitful scam called Control-Finance, a supposed crypto venture based in the United Kingdom.

The US Commodity Futures Trading Commission (CFTC) uncovered the scheme, revealing that Control-Finance defrauded customers of about $147 million. Within 5 months of operation (from May 1, 2017 to October 31, 2017), the now-defunct crypto scheme lured unsuspecting crypto enthusiasts into its fishing net by posing as a legitimate crypto project and convinced them to buy Bitcoin with cash and store the cryptocurrency there. The alleged fraudulent scheme also created an affiliate program to attract more ‘fishes’ to its net.

As of September 2017, Control-Finance pulled the plug on all of its activities, including taking down its online footprint. Control-Finance deleted its official website and took down advertising contents from social media platforms including Twitter, Facebook, and YouTube. The crypto scheme also went as far as halting payments to its customers and members of its affiliate program.

Despite the ‘total shutdown,’ its executives continued to pacify clients with emails, promising to return their Bitcoin deposits by late October or in November 2017. Alas, the customer’s virtual coins were never returned, and the company too.

Reimbursing Old Clients with New Clients’ Bitcoin

Digging deep into the matter, the CFTC discovered that the whole saga was a planned act to defraud innocent customers of their hard-earned cash. The CFTC found that Control-Finance operated as a Ponzi scheme, reimbursing old clients with the crypto coins deposited by new clients. The CFTC findings showed that the crypto scheme misappropriated about 22,858.822 Bitcoin, which was valued at $147 million at the time.

Control-Finance allegedly misappropriated the said amount of Bitcoin through thousands of circuitous blockchain transactions. The crypto scheme routed a huge trunk of these transactions through different wallet addresses it opened at another cryptocurrency venture named CoinPayments.

Therefore, the CFTC has filed a case against the now-defunct Control-Finance for presenting false information of the firm and defrauding tons of customers of their cryptocurrency capital. The regulatory agency has taken action to permanently halt the defendant from further violations of the Act and Regulations. The agency also seeks to make Control-Finance repay all it owes its clients, among others.