Ohio Man Accused Of Operating $12 Million Crypto Ponzi Scheme

KEY POINTS

CFTC has charged Rathnakishore Giri and his parents Giri Subramani and Loka Pavani Giri
The agency is seeking civil monetary penalties and a permanent ban on trading
Giri and his two companies made over $12 million and 10 bitcoins from at least 150 customers

The Commodity Futures Trading Commission (CTFC) has charged Rathnakishore Giri of New Albany, Ohio, for soliciting over $12 million and at least 10 Bitcoin (BTC) in an alleged crypto Ponzi scheme.

According to a statement from CFTC, the U.S. regulator has filed a civil enforcement action in the U.S. District Court for the Southern District of Ohio against Giri who is responsible for duping more than 150 customers via his two companies -- NBD Eidetic Capital, LLC, and SR Private Equity, LLC.

The CFTC said Giri "misappropriated customer funds intended for digital asset trading." His parents, Giri Subramani and Loka Pavani Giri, are also being charged "as relief defendants in possession of funds to which they have no legitimate interest."

"The complaint charges that from approximately March 2019 through the present, the defendants engaged in a fraudulent scheme in which they solicited and accepted over $12 million and more than 10 bitcoins from at least 150 customers to invest in various digital asset investment funds purportedly operated by the defendants," the CFTC said.

The agency also added that Giri and his accomplices made "numerous false and misleading statements in their solicitations" and guaranteed profits to the victims while touting Giri's success as a crypto trader. The investors were also promised that they will be able to withdraw their funds whenever they wanted to but it was false.

"The complaint also alleges in their solicitations to customers, the defendants omitted material facts, including the defendants misappropriated customer funds to pay profits to other customers in a manner akin to a Ponzi scheme and also misappropriated customer funds to pay for Giri's lavish lifestyle, which included yacht rentals, luxury vacations and luxury shopping," the CFTC said.

The Division of Enforcement staff members in charge of the case are Dmitriy Vilenskiy, Karen Kenmotsu, Luke B. Marsh and Paul G. Hayeck.

The authority seeks "restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations."