Following an already rough month for bitcoin, three U.S. virtual currency operators have been charged with fraud by the United States Commodity Futures Trading Commission (CFTC). The CFTC alleges that CabbageTech, Entrepreneurs Headquarters Ltd., and one unnamed bitcoin operator have engaged in fraud, misappropriation of funds, and misrepresentation, causing significant financial harm to investors.
The complaint goes on to allege that Patrick K. McDonnell and his company, CabbageTech, doing business as Coin Drop Markets, made false promises to investors. The CFTC alleges that Coin Drop Markets promised bitcoin trading advice to investors as well as bitcoin purchasing and trading on investors’ behalf. The complaint goes on to allege that Coin Drop Markets never delivered on those promises, and investors never saw their money again after handing it over to Coin Drop Markets.
“The Defendants here preyed on customers interested in Bitcoin and Litecoin, promising them the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of a supposed expert,” a statement from the CFTC reads. “In reality, as alleged, customers only bought into the Defendants’ fraudulent scheme.”