(CMR) Last week, the Federal Trade Commission (FTC) officially announced the settlement of a lawsuit following a federal trial in a U.S. District Court at Southern Florida against the founders of Bitcoin Funding Team.
They were accused of running a crypto-denominated multi-level marketing scheme.
The operators of the fraudulent investment schemes are ordered to pay restitution and have been barred from operating or participating in other such MLM schemes, according to a statement made by the FTC on August 22.
On February 16th, 2018 the FTC filed a lawsuit against four individuals—Thomas Dluca, Louis Gatto, Eric Pinkston, and Scott Chandler—for violating FCT Acts by “advertising, marketing, and promotion of purported money-making schemes.” In March they were successful with obtaining a court order against four individuals that stopped their manipulative marketing practices and froze their assets.
They identified Thomas Dluca as the founder and promoter of Bitcoin Funding Team. It alleged that Dluca, Pinkston, and Gatto falsely promised participants of massive returns by paying cryptocurrencies to enroll in schemes marketed under the names of Bitcoin Funding Team and My7Network.
The settlement terms are that:
the promoters of recruitment-based cryptocurrency schemes are permanently banned from operating or participating in any multi-level marketing program, as part of a settlement with the Federal Trade Commission.
In addition, each party has agreed to pay fines totally over $500,000. Under the corporate names Bitcoin Funding Team and My7Network, the fraudsters promoted their crypto investment schemes by misrepresenting potential earnings. They used social media, YouTube and conference calls to promote the scams.
In one instance, investors were promised $80,000 in monthly income from an initial investment of $100. Evidence submitted stated that founder, Dluca, misleadingly told listeners on a marketing call on behalf of the company that it “will make a millionaire of everybody on this phone.” Sadly, most participants failed to even recoup their initial investment.
Thomas Dulca, Eric Pinkston, Louis Gatto and Scott Chandler sat at the top of a pyramid scheme. In order to stay in operation, investors were encouraged to recruit new participants. Though promised large rewards, most participants “failed to recoup their initial investment.”
In addition to his promotion of Bitcoin Funding Team, Chandler advertised for Jetcoin, “which promised participants a fixed rate of return, but failed to deliver on these claims,” the FTC alleged.
As part of the settlement, the men are barred from ever
“operating, participating in, or assisting others in promoting or operating any multi-level marketing program, pyramid, Ponzi, or chain referral scheme.”
They are also barred from misrepresenting investment opportunities.
A number of crypto-related MLMs around the world have fallen away after being found to be fraudulent and essentially nothing more than a pyramid scheme.
There have been several crypto MLMs here in the Cayman Islands that had local persons excited, but lately, the buzz had dulled.