CabbageTech Fined $1.1 Million by CFTC on Crypto Trading-related Fraud

A cryptocurrency trading company and its leader have been fined $1.1 million after being accused of defrauding clients.

0

A cryptocurrency trading company and its leader have been fined $1.1 million after being accused of defrauding clients.

They have also been banned from any future trading in digital assets. This decision was reached in a case filed by the Commodity Futures Trading Commission (CFTC).

CabbageTech Fined .1 Million by CFTC on Crypto Trading-related FraudCabbage Tech receives a lifetime trading ban

The accused in this case is Cabbage Tech aka Coin Drop Markets and the firm’s principal, Patrick K. McDonnell.

The New York Eastern District Court while trying the case on Wednesday punished Cabbage Tech and Patrick after the CFTC has accused them of defrauding clients.

In a report by Law 360, U.S. District Judge Jack Weinstein ruled that the trading firm and its head McDonnell didn’t adhere to the Commodity Exchange Act. They were found to be engaging in egregious intentional violations of federal regulations and law.

Judge Jack Weinstein slapped a lifetime ban on the defendants. He further ruled that they will have to pay a fine of approximately $1,161,716 – $871,287 in penalties while they will pay an extra 290,429 in restitution.

The Judge believed that the evidence that was presented before the court by the CFTC was enough to prove that the crypto trading firm and McDonnell engaged in a fraudulent scheme between January and July last year.

It was revealed that McDonnell convinced his clients that the firm, Cabbage Tech was a successful one with several employees and has multiple offices.

it turned out to be false as it was fully-owned and run by the principal from a home basement in Staten Island, New York.

McDonnell’s scheme ended in June last year after he claimed that Coin Drop Markets had been hacked. He released o message on the firm’s website, later on, stating that due to the hack, the firm will be suspending its services.

The court however uncovered that there was no hacking, with the defendant shutting down the site as well as other digital properties before ending communication with his clients.

Cabbage Tech took advantage of Bitcoin fever

In reports earlier this year, the CFTC brought the case against Cabbage Tech in January. The agency accused the defendants of promising to offer trading advice to customers but instead stole cryptocurrencies from them.

CFTC’s Director of Enforcement at the CFTC, James McDonald back then commented that the defendants preyed on customers that were interested in Bitcoin and Litecoin.

McDonnell promised the investors the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of an industry expert. However, the victims only bought into the Defendants’ fraudulent scheme

During the trial, McDonnell represented himself as he claimed that he couldn’t afford the services of a lawyer. This was despite attempts by the court to impress upon him the need for counsel.

FTC tackling the high rate of Bitcoin blackmail scams

Another government agency, the Federal Trade Commission (FTC) is looking to tackle the high rate of Bitcoin blackmail scams by offering consumers advice via its website. The agency started this a few days ago as they aim to curb the high rate of Bitcoin blackmail scams.

The commission advised people to avoid giving their personal information to people they don’t know. They should also ignore unexpected requests, something that has become very rampant.

In addition to that, potential victims should carry out online searches of any suspect organizations including the words ‘scam’ or ‘review’ in the search engine. This will likely reveal if others have complained about the group asking for information.

Leave A Reply

Your email address will not be published.