An Illinois district court judge has sided with the Commodity Futures Trading Commission (CFTC) in a cryptocurrency Ponzi case, classifying two lesser-known altcoins as commodities.
The Ponzi scheme involved Oregon native Sam Ikurti and his several companies, which defrauded victims by promising them “steady returns” of 15% per year from investments in “digital asset products.”
This included Bitcoin (BTC) and Ether (ETH), but also Olympus (OHM) and Climado (KLIMA), which the order states are also eligible as commodities.
The CFTC said, “These virtual currencies fall into the same general category as bitcoin, and there are regulated futures contracts for bitcoin.”
KLIMA is the governance token of Klima DAO, a decentralized autonomous organization that promotes itself as solving the “coordination” problem of climate finance.
According to CoinGecko data, KLIMA is trading at $3.55 at the time of publication, down 99.9% from its all-time high of $3,777 on October 21, 2021.
OHM is the governance token of OlympusDAO, an organization that aims to create a community-owned decentralized reserve currency.
Oregon Man to Pay $120 Million Fine for Ponzi Scheme
The CFTC said in a statement on July 3 that Ikurti had assured potential participants that he was investing only in stable cryptocurrencies and had exaggerated his previous success stories to gain investors’ trust.
But instead of returning profits to participants, Ikurti committed a “Ponzi scheme,” repeatedly distorting facts about the fund’s performance and deliberately omitting the fact that the fund’s value had fallen by more than 98.99% in a matter of months.
The order also found that Ikkurty transferred most of the funds to early investors to protect them from losses, resulting in a $20 million shortfall for carbon offset program investors.
The CFTC also noted that Ikurti previously lost all of his personal Bitcoin holdings in a hack.
Judge Rowland ordered Ikurti to pay more than $83.7 million in restitution and $36.9 million in restitution.
Related: KlimaDAO Japan Launches Carbon Credit Market with Progmat
The CFTC first accused Ikurti and Ravishankar Avadanam of fraud and failure to register with the agency in May 2022.
The CFTC said the pair used websites, YouTube videos and “other means” to raise more than $44 million from at least 170 people to trade cryptocurrencies, derivatives and commodity futures contracts.
magazine – Polkadot Indy 500 Driver Connor Daley: ‘My dad is a DOT officer, how mad is that?’