Court Orders UK Man to Pay $571m for Operating Fraudulent Bitcoin Trading Scheme(cftc.gov)
cftc.gov
Court Orders UK Man to Pay $571m for Operating Fraudulent Bitcoin Trading Scheme
https://www.cftc.gov/PressRoom/PressReleases/8371-21
85 comments
"all trading schemes are complete cons" should be your default assumption
Especially considering if someone knows about a scheme that actually works (in the sense that it significantly beats the market), they would be using it quietly for themselves instead of sharing it with other people.
all trading schemes that you would have access to are cons.
That is to say, real players aren't soliciting investments from retail.
That is to say, real players aren't soliciting investments from retail.
> Federal Court Orders Man to Pay $572 Million
> Reynolds solicited at least 22,190 bitcoin
Looks like crime does pay – pays around $713 Million. Not a bad return for around 6 months of work.
>Looks like crime does pay – pays around $713 Million
It only pays because BTCUSD shot up since the crime was committed.
It could have gone the other way and the scammer would owe way more than he stole at the time.
At any rate, I doubt this guy's asset are within reach of either government (UK or US) unless the throw him in a cage until he regurgitates his private keys.
It only pays because BTCUSD shot up since the crime was committed.
It could have gone the other way and the scammer would owe way more than he stole at the time.
At any rate, I doubt this guy's asset are within reach of either government (UK or US) unless the throw him in a cage until he regurgitates his private keys.
> unless the throw him in a cage until he regurgitates his private keys.
In the UK it's a crime to not disclose keys or passwords to the police, even if it's only for investigatory purposes. So they could have done this before it even went to trial. Presumably they could do it now under the pretext of investigating the UK victims of the scam.
But I believe the maximum sentence is two years, whether through the key disclosure law, or general contempt of court. I'd do 2 years for $713 million. I think almost everyone would.
In the UK it's a crime to not disclose keys or passwords to the police, even if it's only for investigatory purposes. So they could have done this before it even went to trial. Presumably they could do it now under the pretext of investigating the UK victims of the scam.
But I believe the maximum sentence is two years, whether through the key disclosure law, or general contempt of court. I'd do 2 years for $713 million. I think almost everyone would.
> I'd do 2 years for $713 million.
Heck, I've already done 10 years with my current employer for far less.
Heck, I've already done 10 years with my current employer for far less.
> In the UK it's a crime to not disclose keys or passwords to the police
Makes me happy I don't live there. At the very least, it saves me from having to resort to steganography and/or claiming amnesia.
Also: he's already committed a larger crime, so who cares.
Makes me happy I don't live there. At the very least, it saves me from having to resort to steganography and/or claiming amnesia.
Also: he's already committed a larger crime, so who cares.
Are they all in one wallet, or spread out in multiple wallets? Prosecutors know about stacking charges, - 2 years for each password...
Then, since you are required to pay restitution, once one Satoshi of those coins moves, on the public blockchain, you're in hot water again.
Basically, you'd be doing 2 x [X wallets] years, to be able to look at your blockchain addresses holding all that BTC and never touch them. Unless, you'd previously moved some to an address that was never never-transacted-with and never detected.
Then, since you are required to pay restitution, once one Satoshi of those coins moves, on the public blockchain, you're in hot water again.
Basically, you'd be doing 2 x [X wallets] years, to be able to look at your blockchain addresses holding all that BTC and never touch them. Unless, you'd previously moved some to an address that was never never-transacted-with and never detected.
Most of Europe is quite good for that kind of crime,in the US they'd probably lock you in and throw the keys into the ocean.
In the US you just go "oh, sorry, forgot to register as a bank" and fix it retroactively without ever going to trial because you can handsomely pay off everyone involved.
Depends how wealthy you are. $713m may be enough, but H. Beatty Chadwick did 14 years because Delaware County Court didn't believe his claim he no longer had $2.5m.
> I doubt this guy's asset are within reach of either government (UK or US) unless the throw him in a cage until he regurgitates his private keys
What do you think happens when you wilfully violate a court order?
At best, he will have to avoid touching those assets to avoid being detected. They’re tainted on a public ledger.
What do you think happens when you wilfully violate a court order?
At best, he will have to avoid touching those assets to avoid being detected. They’re tainted on a public ledger.
> What do you think happens when you wilfully violate a court order?
You exchange a couple of years for $700 million and move to Thailand?
You exchange a couple of years for $700 million and move to Thailand?
> You exchange a couple of years for $700 million and move to Thailand?
Couldn't have put it better.
Couldn't have put it better.
> They’re tainted on a public ledger.
They're tainted in the UK, a small and foggy island lost somewhere in the north atlantic.
Against 700+ MUSD, that doesn't carry much weight.
Also, isn't there some sort of double-jeopardy rule in the UK?
They're tainted in the UK, a small and foggy island lost somewhere in the north atlantic.
Against 700+ MUSD, that doesn't carry much weight.
Also, isn't there some sort of double-jeopardy rule in the UK?
Seems like the way to fine him is in BTC then.
Maybe because he distributed some of these as part of his Ponzi scheme? So he is being order to pay the remaining amount.
> ₿
Am I the only one who is somehow surprised and annoyed that Bitcoin has its own unicode character?
Am I the only one who is somehow surprised and annoyed that Bitcoin has its own unicode character?
I mean, yes, but so does the Austral and it lasted less than Bitcoin has already.
Yet Klingon script was rejected. Unicode character acceptance seems to be entirely arbitrary. Gotta make space for all the new poop emoji somehow I suppose.
Bitcoin symbol is used far more than Klingon characters. Simple as that.
And anyone Klingon is declared for use in the private use area, like other niche languages.
And anyone Klingon is declared for use in the private use area, like other niche languages.
[deleted]
hm. yes.
The other day I wanted to share a windows keyboard shortcut and thought it would be nice to use the windows logo to represent the key but was surprised it didn't exist like the Mac CMD one does... :\ At least it's been around longer....
The other day I wanted to share a windows keyboard shortcut and thought it would be nice to use the windows logo to represent the key but was surprised it didn't exist like the Mac CMD one does... :\ At least it's been around longer....
[deleted]
Well, except if he tried to sell them all the bottom would fall out of the 'market'.
Tesla bought $1.5 billion of BTC just a few weeks ago. The demand is there.
https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-i...
https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-i...
according to livecoinwatch[1] a $1.8 billion sell would have a 2% price impact on bitcoin
[1]https://www.livecoinwatch.com/price/Bitcoin-BTC
[1]https://www.livecoinwatch.com/price/Bitcoin-BTC
This is a lie. Lots of that apparent liquidity is fake buy/sell orders that will disappear milliseconds before you manage to use them... Even a sell of $10M can move the market 2%.
You can just wait for your order to clear.
> This is a lie.
Source?
Source?
I'm not sure how to cite "I placed a sell order to match an existing market order, and the majority of the market order was withdrawn 1 millisecond before my order was confirmed, as seen on the websocket message timestamps, and this happened multiple times".
IMO, probably better to say “incorrect” rather than “lie”, as the latter implies intent to deceive. While I am extremely skeptical about BTC (and even though this post is about a BTC scam), I don’t doubt the sincerity of its proponents.
What you describe is highly dependent on the exchange you use and doesn't match my experience at all.
Also, advice, if I may: use limit orders, you're trading in a bot ecosystem, market orders are rarely a good idea.
Also, advice, if I may: use limit orders, you're trading in a bot ecosystem, market orders are rarely a good idea.
10 million market order shouldn't move the market too much if against USD on a US exchange.
You can always just call an OTC broker and the spread is typically 0.3-0.5%
You can always just call an OTC broker and the spread is typically 0.3-0.5%
You think some players are getting last look? I am very interested in this, email me if you would like to disclose more info (products, exchanges, etc where this happened).
That's not too surprising if you consider that orders are added/removed multiple times every second.
Some volume is fake. A lot of real volume is from market makers and other bots. The rest is from people. Almost all of this volume dries up in the face of volatility. If the market moves, people wonder if maybe the seller knows something they don't, and so they pull their limit buy orders and wait. This means slippage occurs in practice more than it would appear.
To be clear, I mean all types of volume will dry up. The bots will pause, and the people will be scared.
Because the financial VC-industrial complex has stock piles of money now, they've learned their lessons enough times, billions of $ they control and are waiting to use to buy Bitcoin for institutional buyers; Coinbase has been promoting this service for years - and on the other end their tightening the funnel of their service by access to sell failing many times now when the price starts to skyrocket - likely to quell the impulse selling of enough of the "army of HODLers."
Will the complex have $100 billion in money waiting to buy up Bitcoin once there's such an event, or has the mantra of "HODL" worked and enough will hold to allow enough institutional money to slowly be moved in (by small handful of decision makers who's gains aren't usually well aligned with who owns the money)?
Will the complex have $100 billion in money waiting to buy up Bitcoin once there's such an event, or has the mantra of "HODL" worked and enough will hold to allow enough institutional money to slowly be moved in (by small handful of decision makers who's gains aren't usually well aligned with who owns the money)?
> the bottom would fall out of the 'market'.
That is a valueless statement.
You have no idea of what the actual supply/demand and liquidity for BTC actually is.
Even if you were to aggregate all the order books of all the existing exchanges, you'd still have no idea because of the number of deals that happen OTC.
That is a valueless statement.
You have no idea of what the actual supply/demand and liquidity for BTC actually is.
Even if you were to aggregate all the order books of all the existing exchanges, you'd still have no idea because of the number of deals that happen OTC.
I think you mean UTC - as in Under the counter. :)
This makes me curious that suppose value of bitcoin since then had dropped to say less than $1 for some reasons, would he still be fined the same amount?
Yes.
> The court’s March 2, 2021 order requires Reynolds to pay nearly $143 million in restitution to defrauded customers and a civil monetary penalty of $429 million.
That is a... robust amount of damages. OTOH:
> The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.
That is a... robust amount of damages. OTOH:
> The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.
Also, it seems they haven't caught the scammer, and he probably keeps most of his assets in crypto that can't be seized. All they'll be able to get is whatever fiat he had under his name.
Apparently has been missing throughout the court cases for the last year. It was a default judgement. Kind of annoying trying to dig up that info the internet; there's a million websites out there all in line to clog up search engines with the same limited facts. They need to cluster them by content or something.
Even in the days before crypto, scammers could hide money in other ways. They need to catch him.
Even in the days before crypto, scammers could hide money in other ways. They need to catch him.
I suspect they won't catch him. Building a new identity isn't really that hard, especially since the guy has had some time to do it, and (I assume) money to pay for it.
> Building a new identity isn't really that hard
No. But he will have effectively given up all his known wallets. If he touches them, he’ll have lit himself up.
No. But he will have effectively given up all his known wallets. If he touches them, he’ll have lit himself up.
Crypto is quite easy to launder in a practical sense, and he can go to Russia or China and live freely.
Then they know he's still alive but not his new identity?
Would a "grey" crypto market refuse to trade (some) of the coins into another less traceable crypto?
Would a "grey" crypto market refuse to trade (some) of the coins into another less traceable crypto?
> Would a "grey" crypto market refuse to trade (some) of the coins into another less traceable crypto?
No, but every wallet it touched would be flagged by AML software, making it ineligible for e.g. sale to an institution or deposit at Coinbase. That reduces its value, albeit not to zero.
No, but every wallet it touched would be flagged by AML software, making it ineligible for e.g. sale to an institution or deposit at Coinbase. That reduces its value, albeit not to zero.
This can't possibly be correct. You can send BTC to anyone without their consent. So you're saying that if he was to use a mixer to clean his bitcoins, the mixer would then interleave his transactions with other random ones and he would get clean crypto on a new wallet with no connection to his old one, but EVERY single transaction the mixer does with his coins would be tainted (?) so in effect it would give him his clean btc but screw the mixer's other customers
What if he also spread 100btc among random active wallets of coinbase users, would coinbase ban thousands of users? take their "tainted" crypto?
What if he also spread 100btc among random active wallets of coinbase users, would coinbase ban thousands of users? take their "tainted" crypto?
It still leaves a trail that could be subpoenaed.
How would that bother you? Could they trace you with that information?
I don't know about that to be sure.
If you operate a grey crypto market your already with one foot in a US jail.
Is trading on IRC illegal? Everyone used to do that and I wouldn't call that "grey."
If they truly are interested in finding him it's straightforward and within their power, just a bit tedious.
If they truly are interested in finding him it's straightforward and within their power, just a bit tedious.
I thought there we're markets that are only accessible through vpns or on the darknet.
Anything you can get to via a normal VPN isn't secret, those just help you get around local firewalls.
As for exchanges on TOR: maybe? I haven't heard of any and IRC was rough and expensive enough. Exchanging bitcoin on TOR sounds like a great way to loose all of it.
As for exchanges on TOR: maybe? I haven't heard of any and IRC was rough and expensive enough. Exchanging bitcoin on TOR sounds like a great way to loose all of it.
I'd be surprised if he doesn't have enough money converted to cash already.
But sure, if he touches those wallets now, he will possibly leave a paper trail. Let's hope, for the victims' sake, that he does.
But sure, if he touches those wallets now, he will possibly leave a paper trail. Let's hope, for the victims' sake, that he does.
Not sure if it's applicable in this case,but the UK has an interesting concept where you might end up in a prison with additional years piled on for failure to pay the outstandings.There were some high profile cases were VAT fraudsters kept getting additional years for failing to pay the taxman.
You won't get prison for the inability to pay... But you might get prison for deliberately not paying even if you can pay, or for lying on government forms/falsifying records.
I could have constructed my previous comment better: yes, nobody's going to prison for sime non-paymens but rather fraudulent activity and failure to compensate the victims of such actions.
The US governments love putting people in jail for inability to pay fines. But mostly <$1000 fines and poor people.
There are so many of these scams in the wild. I have a former client who is constantly spamming me with "can you check this out and tell me if it is legit?" emails.
They are so formulaic and obvious, but people go blind with greed.
I hope all the scammers eventually suffer one way or another, but I worry that there are so many that many of them will slip by.
They are so formulaic and obvious, but people go blind with greed.
I hope all the scammers eventually suffer one way or another, but I worry that there are so many that many of them will slip by.
I hope you charge a good fee for your evaluations.
Too many trading/crypto scammers out there and youtube especially is full of them with their shitty ads. Amazing how gullible people are and they fall for these "get rich quick" schemes.
Hey folks, remember that there is no AI behind trading that a youtuber can master. If there is, they would definitely not share with you. Please stop losing your hard earned money to shit scams.
Hey folks, remember that there is no AI behind trading that a youtuber can master. If there is, they would definitely not share with you. Please stop losing your hard earned money to shit scams.
[deleted]
should have used monero
How would enforcing a thing like this operate? Surely there would have to be a subsequent UK case if that's where he is resident, to solicit any enforcement
Why does there have to be a UK case? Governments extradite people all the time.
How does extraditing him make him pay up anything? It is also not guaranteed that the UK courts would agree to the extradition.
This is interesting, it shows there is CFTC interest in virtual currency markets and they are willing to prosecute.
A pyramid scheme on top of a pyramid scheme. Outlaw this nonsense already.
[deleted]
Standard white collar slap o' the wrist
One of my in-laws is a serial MLM patsy and has totally fallen for one of these. Both AI and cryptocurrency are in the news a lot, making it easy for con-artists to dazzle people with marketing techno-babble and promises of guaranteed riches. (Obviously not all trading schemes are complete cons, but so many are.)