Statement from Commissioner Kristin N. Johnson Regarding CFTC Accusing Ohio Resident of Operating $12 Million Bitcoin Ponzi Scheme

Yesterday, the Commodity Futures Trading Commission (CFTC) filed an injunction suit in the Southern District of Ohio against Rathnakishore Giri (Giri) and its companies, SR Private Equity, LLC and NBD Eidetic Capital, LLC. As alleged in the complaint, Giri engineered and perpetuated a Ponzi scheme designed to defraud investors interested in investing in digital assets. Under the guise of operating a private equity investment fund focused on investing in digital assets, Giri seized on the contemporary fervor for digital asset investment opportunities and attracted unwitting investors to they contribute over $12 million in cash and bitcoins to its funds with the promise of exceptional returns without the risk of financial loss.

The complaint alleges that Giri lured his clients by making false and misleading statements touting his experience, guaranteeing profits to clients, and assuring clients that they could withdraw their initial investment and profits at any time. The complaint also alleges that instead of using client funds to acquire and trade digital assets as promised, Giri simply pocketed clients’ money, using their invested funds to fund his lavish lifestyle, characterized by use of private jets, yacht charter, an extravagant vacation home. , a fancy car and expensive clothes. In other cases, Giri distributed contributions from newly solicited investors to existing investors, misrepresenting the contributions as “profits” from the funds’ successful trading strategies. As the CFTC rigorously monitors the markets and enforces regulations in accordance with its mandate to protect customers, new financial products can create new challenges. Identifying and responding to fraud in these emerging markets may be difficult or delayed given the agency’s limited visibility in these markets.

It is imperative that all market participants understand that such conduct will be subject to enforcement action in accordance with our mandate. The recent allure of digital assets and cryptocurrency market businesses proclaiming high returns or promising instant wealth but obscuring deceptive schemes that borrow from long-banned behavior is deeply concerning. While responsible innovation has many benefits, customers should remain vigilant. Fraudsters looking to take advantage of an unsuspecting public will exploit popular interest in innovative fintech and commit scams that deprive investors of their hard-earned money. This case illustrates these dangers, highlights the pervasive threats and demonstrates that, regardless of asset class, effective enforcement and client protection must be among our top priorities.

I applaud the diligent work of our fraud team, including Dmitriy Vilenskiy, Karen Kenmotsu, Luke B. Marsh and Paul G. Hayeck, who filed this case and continue to seek justice for victims.

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