KANALCOIN NEWS – At the request of the Federal Trade Commission, a federal court has stopped Bitcoin investment activity using a pyramid scheme. The court found guilty on 4 defendants namely Thomas Dluca, Louis Gatto, Pinkston, Scott Chandler who was the promoter of a fraudulent scheme involving cryptocurrency as the object of the transaction.
The fraudulent scheme that is carried out is to promise participants that they can get big profits by paying a certain amount of crypto such as Bitcoin or Litecoin to be able to register in the scheme and then are required to attract new members to get payments from them. The pyramid schemes being promoted are Bitcoin Funding Team and My7Network. They took advantage of the use of websites, social media, YouTube videos and conference calls, the defendant promised the lure of large prizes by making payments using Bitcoin and Litecoin.
The defendant also claimed that the Bitcoin Funding Team was able to get a monthly income from $100 to $80,000. The FTC stated that however the structure of the scheme can only be ensured that those who get large profits are not many. Most of the participants will fail and have to cover their investment at the beginning.
The FTC also added that if the Bitcoin Funding Team and My7Network participants will only generate income by recruiting new participants and convincing them to make payments using crypto, as was done before, things like that will continue..
For example, Bitcoin Funding Theme participants are asked to make Bitcoin payments in advance to previous participants and pay a fee to the Bitcoin Funding Team. With this payment process, it means that participants have met the requirements to be able to recruit new members and get paid from them. The promoter claims that participants can get bigger rewards if they pay additional bitcoins.
Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection said “This case has shown that fraudsters are always finding new ways to market old schemes, which is why the FTC will always be vigilant regardless of the platform and currency used.”
“The schemes promoted by the defendants were designed to enrich those at the top at the expense of others.”
The FTC also alleged that the fourth defendant, Scott Chandler, also promoted the Bitcoin Funding Team and the Jetcoin fraudulent scheme.
Jetcoin also promotes recruitment schemes and also promises a fixed rate of return on their initial bitcoin investment due to trading bitcoins. Chandler claims that Jetcoin participants can double their investment in just 50 days. In fact, the FTC says the scheme failed to deliver on this claim, and instead ceased operations within two months of its launch.
As requested by the FTC, the court has also issued a temporary restraining order and frozen some of the defendant’s assets while waiting for the trial to take place.
Meanwhile, the Federal Trade Commission is an institution that works to promote competition, protect and provide education to consumers in trade and business matters.
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