The U.S. Commodity Futures Trading Commission (CFTC) has sought roughly $572 million from Benjamin Reynolds, owner of Control-Finance, in penalties and restitution of misappropriated funds. The regulator accuses him of running a cryptocurrency pyramid, according to FinanceFeed.
The CFTC asked the court to rule in its favor since the defendant did not appear and did not respond to the Commission’s complaint.
Under the regulator’s proposal, Reynolds would be ordered to pay restitution of nearly $143 million and a $429 million fine. He would also be barred from registering commercial companies and entering into any Bitcoin-related deals.
The Commission filed suit against Control-Finance and Reynolds last year. According to the regulator’s complaint, at least since May 1, 2017, the company and its sole founder and director illegally misappropriated 22,858 BTC worth $147 million at the time from more than a thousand investors in the pyramid called Affiliate Program Control-Finance.
The defendants redirected portions of new clients’ deposits in Bitcoin to other users, claiming that this was profit from trading the digital currency.
Around September 10, 2017, the defendants abruptly stopped payments to Affiliate Program customers, deleted the Control-Finance website and promotional content of the program on social media.
By email and via Facebook they assured investors that they would resume activity by November. In reality, the defendants laundered the misappropriated Bitcoin through thousands of transactions, the regulator said.
In 2019, the CFTC collected more than $1.3 billion in fines, including from participants in the cryptocurrency industry.
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