CFTC charges man with defrauding investors of $21 million in cryptocurrency Ponzi scheme

The SEC and DOJ have also taken parallel action against Ichioka.

The U.S. Commodity Futures Trading Commission (CFTC) accused William Koo Ichioka of defrauding investors of tens of millions of dollars by claiming to be a digital asset and foreign exchange trader.

According to an official statement, the CFTC filed a lawsuit against Ichioka in the U.S. District Court for the Northern District of California, accusing him of mishandling more than $21 million in investor assets and using new client funds to create the appearance of profits in a Ponzi scheme.

CFTC charges man with defrauding investors

The commodities watchdog said Ichioka raised millions of dollars from more than 100 individuals and entities promising to trade foreign exchange through a pool of commodity interests run under the name Ichioka Ventures. In advertising the services on his website, Ichioka claimed the promised returns matched his track record as a self-made investor who had made millions.

According to his trading strategy, Ichioka promises participants in his scheme a 10% return every 30 business days. However, he suffered a huge loss. In order to conceal losses, he provided false documents to exaggerate the amount of funds in the commodity interest pool account, and provided participants with false account statements. The alleged fraudsters also used funds from other participants to pay investors alleged proceeds.

Despite Ichioka's claims, he actually misappropriated client funds for personal expenses. He mixed the participants' assets with his own and used them to buy luxury items such as jewelry, cars and watches.

Parallel Action by SEC and DOJ

The CFTC charged Ichioka with operating an "old-school" Ponzi scheme and engaging in "ordinary" fraud. The alleged fraudsters have proposed a settlement to resolve the commission's allegations. On the other hand, the agency is seeking a court order to impose a trading and registration injunction and fine against Ichioka.

“Investor education and enforcement actions are critical to our efforts to prevent fraudsters from defrauding hardworking investors. As such, I strongly encourage all members of the public to learn about potential scams and abuses in the digital asset market by visiting our investor advisory page. In particular, fraudsters who offer guaranteed or unusually high returns (or both) should undergo immediate scrutiny and additional investigation before transferring any funds," said Commissioner Kristin N. Johnson .

Meanwhile, the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have opened parallel investigations into Ichioka's conduct and will soon reach a settlement.