Texas Federal Court Fines Couple 400,000 USD, For Fraudulent Bitcoin Scheme

By Rishma Banerjee

A Texas federal court has ruled that Morgan Hunt and Kim Hecroft, purportedly residents of Texas and Maryland respectively will pay $400,000 for carrying out a fraudulent Bitcoin scheme while falsely impersonating the U.S Commodity Futures Trading Commission (CFTC) in the process.

According to a July 10 press release by the CFTC, between January 2017 and September 2018, the men carried out their scheme under the name of the companies Diamonds Trading Investment House, and First Options Trading.

Through Facebook and email, they lured members of the public into investing their Bitcoins in a pool of funds that would, in turn, go into trading products like binary options, diamonds, and foreign currency contracts.

However, they were not only misrepresenting their experience as traders or portfolio managers but ended up misappropriating these funds.

Further, when called on by investors to pay out earnings, they lied that they had to pay taxes to the CFTC. They also engaged in other fraudulent activities such as falsifying account statements, impersonating a CFTC investigator and sending forged documents featuring the CFTC’s official seal and purportedly signed by the CFTC General Counsel.

For these offences, the court ordered that the men (Morgan Hunt and Kim Hecroft) each pay restitute and a $180,000 civil monetary penalty. Additionally, the men would come under permanent trading and registration ban, although there is no provision for paying back victims.

James McDonald, CFTC Director of Enforcement, also seized the opportunity to warn citizens regarding fraudulent crypto investments. He said,

“Retail customers should exercise caution before buying or trading cryptocurrencies on unfamiliar Internet websites or social media. The CFTC […] does not collect taxes or fees, and will continue to educate the investing public and aggressively pursue misconduct in this arena.”

In a similar development, Stmarket.co reported last month that the CFTC announced civil enforcement against Benjamin Reynolds, the alleged founder of a $147 million Bitcoin Ponzi scheme.