A federal
judge has ordered an Oregon man and his companies to pay over $83 million in
restitution to victims of a fraudulent digital asset investment scheme that
operated as “a classic Ponzi scheme,” according to court documents.
Court Orders $83 Million
in Restitution for Digital Asset Fraud Scheme
Judge Mary
Rowland of the US District Court for the Northern District of Illinois granted summary judgment
to the Commodity Futures Trading Commission (CFTC) against Sam Ikkurty and
several of his companies, including Jafia LLC and Ikkurty Capital LLC. The
court found the defendants violated the law through fraud and failure to
register as commodity pool operators.
According
to the court’s findings, Ikkurty recruited investors by promising 15% annual
returns from investments in digital assets like Bitcoin and Ethereum. However,
the judge determined Ikkurty made numerous false statements about his
investment experience and fund performance while operating “something akin
to a Ponzi scheme.”
“Ikkurty’s
marketing materials misstated his fund’s historical performance and omitted the
fact that the fund fell in value by 98.99% over a period of a few months,”
the CFTC commented in the official statement.
The order
requires the defendants to pay $83.7 million in restitution and $36.9 million
in disgorgement. The CFTC plans to seek additional injunctive relief and civil
monetary penalties.
Federal court enters summary judgment against Oregon man and orders $83 million in restitution for fraud victims. The judgment is CFTC’s first addressing fraud related to a carbon offset program. Learn more: https://t.co/lK6U7gKIfL
— CFTC (@CFTC) July 3, 2024
“A Classic Ponzi move”
The court
also found the defendants misappropriated over $20 million through a fraudulent
carbon offset program. Investors were sold products supposedly backed by carbon
offset-related digital assets, but the funds were instead used to pay earlier
investors.
“This
resulted in a shortfall of more than $20 million for the carbon offset program
participants,” the order states. “This series of events was a classic
Ponzi move.”
In addition
to fraud charges, the defendants were found to have failed to register with the
CFTC as required. The order also affirmed the CFTC’s jurisdiction over certain
non-Bitcoin cryptocurrencies, stating that OHM and Klima “qualify as
commodities” similar to Bitcoin.
CFTC
officials cautioned that the restitution order may not guarantee recovery of
lost funds if the defendants lack…
