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CFTC Charges Florida Man and His Companies in Fraudulent Forex and Digital Asset Scheme

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April 16, 2020

Washington, D.C. — The Commodity Futures Trading Commission today filed a complaint in the U.S. District Court for the Middle District of Florida, charging defendants Alan Friedland of Florida and his Florida-based companies, Fintech Investment Group, Inc. (Fintech) and Compcoin LLC, with fraudulently soliciting more than $1.6 million from their customers in connection with a leveraged or margined off-exchange foreign currency (forex) scheme.

“The CFTC remains committed to protecting market participants from fraudulent schemes, including novel forms of fraud like the one alleged here, where defendants allegedly solicited customers to purchase a digital asset in order to gain access to Fintech’s purported forex trading algorithm,” said CFTC Director of Enforcement James McDonald.

According to the complaint, starting in at least 2016 and proceeding through 2018, Friedland and his companies fraudulently solicited customers and prospective customers to purchase a digital asset known as Compcoin. The defendants falsely promised, among other things, that Compcoin would allow customers to gain access to Fintech’s proprietary forex trading algorithm known as ART, and falsely advertised that ART would deliver high rates of return. 

According to the complaint, in marketing Compcoin, the defendants also falsely represented, among other things, the use and function of Compcoin and that ART “was ready for release on the open market.” In fact, as alleged in the complaint, the defendants knew that no customer could lawfully utilize ART until Fintech obtained approval from the National Futures Association (NFA), which never occurred. Thus, according to the complaint, the purchasers of Compcoin never gained access to ART as promised, and were left with a valueless asset. 

In its continuing litigation against the defendants, the CFTC seeks civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

Related NFA Action

On March 30, 2020, the National Futures Association filed a member responsibility action against Fintech and an associated responsibility action against Friedland based on their failure to cooperate with the NFA in providing information related to some of the same activities that are alleged in the CFTC’s complaint. The action summarily suspended Fintech and Friedland from NFA membership and prohibits them from soliciting and accepting any customer funds related to forex trading, among other things.

The CFTC thanks the NFA and the Financial Markets Authority of New Zealand for their assistance in this matter.

The Division of Enforcement staff members responsible for this action are Janine Gargiulo, Gabriella Geanuleas, Christopher Giglio, K. Brent Tomer, Lenel Hickson, and Manal M. Sultan.

* * * * * *

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency (Forex) Trading Fraud Advisory, to help customers identify this sort of scam.

The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

 

-CFTC-

Regulator Information

Abbreviation: CFTC
Jurisdiction: USA

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