The United States District Court for the Southern District of New York ordered Jeremy Spence, who as “Coin Signals,” to pay $2.8 million in reparations to victims of a fraudulent operation.
The order settles a Commodity Futures Trading Commission (CFTC) action against Spence, who pleaded guilty earlier this year to running a Ponzi scheme in which he solicited individuals to invest in digital assets such as Bitcoin and ether from December 2017 to April 2019. According to the order:
“During the Relevant Period, Spence obtained virtual currencies such as Bitcoin and Ether worth more than approximately $5 million at the time from individual customers comprising approximately 175 user accounts.”
While the CFTC waits for legislation to establish its role in crypto oversight, Commissioner Kristin Johnson says the agency should begin using its existing powers to strengthen requirements for keeping customers’ assets safe.
“Liquidity crises and a lack of responsible governance at cryptocurrency exchanges and other prominent crypto-intermediaries have roiled the digital asset ecosystem. A series of bankruptcy filings reveals a grim portrait of some of the most egregious corporate governance and risk management failures in recent financial markets history.” Johnson said.
“While Spence’s prison term will limit his ability to continue this scheme, other bad actors stand ready, willing, and able to take his place and prey on victims’ hopes and fears. Accordingly, I strongly encourage members of the public to stay informed about the potential scams and abuses in the digital assets markets by visiting our investor advisory page,” he added.
In May of this year, Spence was sentenced to 42 months in prison.
Johnson’s comments come as the CFTC works with the Senate Agriculture Committee, which oversees the commission, to advance legislation that would allow it to receive more direct reporting from cryptocurrency commodities exchanges.
Since the collapse of the crypto exchange FTX, this process has become more complicated.
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