An Ohio resident who ran a 12 million USD Ponzi scheme that involved Bitcoin was served a district court complaint by Commodity Futures Trading Commission (CFTC). Giri’s Ponzi scheme was a fraud scheme that consisted of paying old investors with funds from new investors.
Giri created and carried out a fraud scheme, in which he mislead the investors of digital assets. Giri and his two companies, SR Private Equity LLC and NBD Eidetic Capital LLC have received a cease-and-desist. Moreover, CFTC has requested the court to make Giri repay his deceived investors.
"Under the guise that he operated a private equity investment fund with a focus on investing in digital assets, Giri seized upon the contemporary fervor for digital asset investment opportunities and lured unwitting investors to contribute over $12 million in cash and bitcoins to his funds with the promise of exceptional returns without the risk of financial loss," CFTC Commissioner Kristin N. Johnson had stated in a public statement published on Friday, August 12, 2022.
After the proposal by the CFTC and the U.S. Securities and Exchange Commission (SEC) about expanding the reporting requirements of private and hedge funds and crypto holdings, the complaint against Giri was filed. Additionally, the proposed rules have been made by the collective effort of regulators and should help to install transparency in private funds' operation.
CFTC claims that Giri violated commodities laws and regulations that prohibit manipulation of information and deceptive devices. Johnson also mentioned in her statement that:
“Giri used investors' money to fund a lavish lifestyle "characterized by the use of private jets, yacht rentals, an extravagant vacation home, a luxury car, and expensive clothing.”
Additionally to the cease-and-desist order, CFTC wants Giri to give up his monetary benefits which are both directly or indirectly connected to the violation of regulations, as well as unlimited salaries, loans, fees, commissions, and revenues including any trading profits.
Johnson replied to the case: "This case illustrates these dangers, underscores the ever-present threats, and demonstrates that – no matter the asset class – effective enforcement and customer protections must be among our highest priorities."