CFTC issues $54M default judgment against trader in crypto fraud scheme

On June 28th, the Commodity Futures Trading Commission (CFTC) announced that Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York had issued a default judgment that granted a permanent injunction against Michael Ackerman, a resident of Alliance, Ohio. 

Ackerman is now subjected to a ban from participating in any trading activities within CFTC-regulated markets and is prohibited from registering with the CFTC. Alongside these restrictions, the judgment mandates Ackerman to provide $27 million in restitution to the victims who suffered from his fraudulent digital asset trading scheme. Additionally, Ackerman is compelled to pay a $27 million civil monetary penalty, serving as a substantial financial consequence for his involvement in the deceptive scheme.

Ackerman is accused of operating a fraudulent scheme that solicited funds from individuals and entities under false pretenses. However, instead of using the funds for their intended purpose, he is alleged to have misappropriated the majority of the funds for personal use or to perpetuate the fraudulent trading scheme. 

The case, brought forward by the CFTC, traces back to February 11, 2020, when Ackerman was accused of orchestrating an elaborate scam that spanned from August 2017 to December 2019. The complaint alleged that Ackerman operated the scheme to solicit funds for trading digital commodity assets but instead misappropriated the funds.

Over 150 individuals and entities reportedly entrusted Ackerman with a total of at least $33 million. Shockingly, less than $10 million of the deposited funds were actually used for trading, while the remainder was fraudulently diverted for personal use or to prolong the deceptive operation.

Related: Ooki DAO to shut down after ‘precedent setting’ court battle with CFTC

During a keynote speech at City Week 2023 in London, Christy Goldsmith Romero, a commissioner of the CFTC, proposed the reduction of cryptocurrency anonymity as a way to mitigate the risks associated with digital assets. Romero highlighted the importance of governments and the industry working together to address the appeal of cryptocurrencies for illicit finance. 

She emphasized that managing the risks of digital assets is crucial to uphold market integrity, national security, and financial stability. Romero specifically mentioned the need to tackle the challenge of identity verification to minimize illicit finance risks in the cryptocurrency market, as the use of mixers and anonymity-enhancing technology introduces significant potential risks.

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