Aggregated News From Investment Management Regulators

Federal Court Orders Rhode Island Man to Pay More than $2.8 Million in Restitution for Virtual Currency Fraud

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Washington, D.C. — The Commodity Futures Trading Commission today announced the U. S. District Court for the Southern District of New York entered a consent order on November 29 for a permanent injunction, restitution, and equitable relief against Jeremy Spence of Bristol, Rhode Island. Spence, at times, conducted business as Coin Signals.

The consent order resolves a CFTC action filed against Spence on January 26, 2021 alleging that he operated a virtual currency Ponzi scheme in which he fraudulently solicited individuals to invest in digital assets such as bitcoin and ether. [See CFTC Press Release No. 8356-21]  

The order requires Spence to pay $2,847,743 in restitution to victims of the fraudulent scheme. The order also permanently prohibits Spence from engaging in further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes permanent registration and trading bans.

Case Background

As found in the order, from approximately December 2017 through April 2019, Spence, at times as Coin Signals, operated a Ponzi scheme in which he fraudulently solicited and obtained more than $5 million of digital assets such as bitcoin and ether from customers. Spence’s trading resulted in significant trading losses and, as in all Ponzi schemes, his payouts of supposed profits to customers were actually misappropriated funds from other customers. The order also found that Spence engaged in numerous efforts to conceal his misconduct, including misrepresenting his trading profitability and the amount of assets he had under management, misappropriating customer funds, and issuing false performance statements. According to the order, Spence eventually admitted to customers that he had engaged in “lies and deceit.”

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

Parallel Criminal Action

In a separate action, the U.S. Attorney’s Office for the Southern District of New York filed a criminal complaint against Spence on January 26, 2021, charging him with one count of commodities fraud in violation of the CEA and CFTC regulations and one count of wire fraud. United States v. Jeremy Spence, No. 1:21-cr-00116 (S.D.N.Y.). Spence was subsequently indicted on those charges.  Spence pled guilty to commodities fraud under the CEA and CFTC regulations and was sentenced on May 11, 2022 to 42 months of incarceration and three years of supervised release. He was also ordered to pay restitution of $2,847,743. 

The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.

The Division of Enforcement staff members responsible for this case are Elizabeth C. Brennan, Christopher Giglio, K. Brent Tomer, Lenel Hickson, Jr., Manal M. Sultan, and former staff member Gates Hurand. The Division’s Digital Assets Task Force also assisted with this matter.

* * * * * * *

The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including one to inform the public of possible risks associated with investing or speculating in virtual currencies or recently launched bitcoin futures and options. 

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), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

This news item was originally published by the Commodity Futures Trading Commission (CFTC US). For more information, see the Source Link.

Regulator Information

Abbreviation: CFTC
Jurisdiction: USA
Email: [email protected]

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