- Rathnakishore Giri of Ohio ran a $12 million Ponzi scheme involving bitcoin
- His companies operated under the guise of a private equity investment fund
A cease-and-desist order was filed at the Southern District of Ohio on August 12 against Rathnakishore Giri and SR Private Equity LLC and NBD Eidetic Capital LLC, his two companies. He has been accused of running a $12 million Ponzi scheme involving bitcoin, CoinDesk reported.
The US Commodities Futures and Trading Commission (CFTC) wants Giri to return the stolen funds to investors.
He operated a ‘private equity investment fund’
Giri is accused of perpetuating a Ponzi scheme, which is a type of fraud where initial investors are paid with funds taken from new ones. His scheme was aimed at duping investors interested in cryptocurrency. CFTC Commissioner Kristin N. Johnson said in a statement:
Under the guise that he operated a private equity investment fund with a focus on investing in digital assets, Giri seized upon the contemporary fervor for digital asset investment opportunities and lured unwitting investors to contribute over $12 million in cash and bitcoins to his funds with the promise of exceptional returns without the risk of financial loss.
Authorities to broaden reporting requirements
On August 11, the CFTC and the US Securities and Exchange Commission (SEC) submitted a proposal that aims to increase reporting requirements of large hedge funds and private funds to include crypto holdings.
The proposal is part of the regulators’ joint effort to make operation of private funds in the country more transparent.
Giri violated commodities laws
The CFTC has accused Giri of violating laws on commodities and regulations that ban the manipulation of information. Allegedly, he spent investors' money on yacht rentals, private jets, a luxury car, an extravagant vacation home, and expensive clothing.
The CFTC wants Giri to expel all financial benefits associated with the fraud apart from ceasing all activity related to it. Benefits include trading profit, revenue, fees, loans, commissions, salaries, and more.
Digital assets are creating 'new challenges'
The commissioner added in her statement that the CFTC was surveying markets and enforcing regulations rigorously, but digital assets and other relatively new financial products were creating new challenges.
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