The Commodity Futures Trading Commission (CFTC) has charged five men with operating a Ponzi scheme. According to the complaint, they used the promise of digital assets they never received to lure investors with promises of stellar profits. The defendants targeted their own Spanish-speaking community where the CTFC is calling «fraud based on affinity». In the CFTC’s view, the victims may have been particularly vulnerable to pressure from people with whom they perceived they had a lot in common. Matchmaking fraud and other scams are on the rise.

The Commodity Futures Trading Commission (CFTC) has taken action against five men accused of defrauding more than 170 investors. The victims mainly spoke Spanish and lost significant sums of money as a result of the scam.

The CFTC’s allegations

In a complaint filed in the US District Court for the Central District of California, the CFTC describes a digital asset commodity trading business, luring victims with promises of profits, commissions and referral rewards. The company, “Icomtech,” is said to have used marketing materials offering luxury vacations and cars, iPhones, and Rolexes to convince others to sign up.

The respondents allegedly promised that there would be a lucrative opportunity. Giving those who participated the opportunity to earn a 20% commission for every package sold and an additional 3% for packages sold by their direct affiliates.

However, the organizers did not receive any digital assets as agreed. Instead, the CFTC alleges that the five misappropriated the funds they were given, operating an «old-school Ponzi scheme.»

Fraud Based on Affinity

The Commission’s statement highlights how the fraud targeted the Hispanic community in California. In statementCFTC Commissioner Kristin N. Johnson describes how «crimes like this pose particular problems»:

“Affinity-based fraud schemes often seek to take advantage of the trust created within a community. Criminals target the identified communities because they are aware of the concerns and challenges that may deter investors from reporting or effectively communicating details of the fraud to law enforcement or regulatory authorities.”

Most cryptographic crimes are tracked on chain, through hacks or fraud. However, the defendants here appear to have used digital assets only as a lure for profit.

The problem of crypto-related crime is chronic and serious. Chain intelligencewhich tracks crime, recorded a record year for criminals in 2022. The total value of cryptocurrency received by illicit addresses rose for the second year in a row, despite the downturn in the market.