- Oregon resident and entities fined $209 million for crypto Ponzi scam
- The schemes disguised as crypto and carbon investments defrauded investors
- $83.7 million restitution and $110.9 million civil penalty included in the fine
- $18 million in stolen digital assets recovered by the CFTC to repay victims
A U.S. District Court has imposed a massive $209 million penalty on Sam Ikkurty, an Oregon resident, and his associated entities for orchestrating Ponzi schemes under the guise of crypto and carbon investments. The ruling by Judge Mary Rowland of the Northern District of Illinois also includes restitution for defrauded investors and a civil penalty, as part of a larger effort by the Commodity Futures Trading Commission (CFTC) to combat crypto-related fraud.
Ponzi Schemes Disguised as Investments
Ikkurty, alongside his entities, including Jafia LLC and Rose City Income Funds, ran deceptive programs falsely promoted as legitimate crypto and carbon market investment opportunities. According to the CFTC, these programs were nothing more than classic Ponzi schemes designed to trick investors out of their money.
CFTC Director of Enforcement Ian McGinley emphasized how these fraudulent schemes were dressed up as cutting-edge investments but were, in fact, “plain, old-fashioned Ponzi schemes.” The court’s ruling holds Ikkurty and his network of entities accountable for soliciting millions from unsuspecting investors and using it to fuel the scam.
Breakdown of Penalties
Judge Rowland’s ruling includes a staggering $83.7 million in restitution for the victims of the scheme. This amount will partially offset the $36.9 million in illegal profits that Ikkurty is required to return. In addition, the judgment includes a $110.9 million civil monetary penalty, underscoring the severity of the misconduct.
On top of these amounts, Ikkurty was hit with a $14 million fine for contempt of court after he unlawfully transferred digital assets from the Receivership Estate during the legal proceedings. He is also required to repay $884,788 in professional expenses that were drawn from the same estate to fund his legal defense.
Recovering Stolen Digital Assets
The CFTC’s victory goes beyond the financial penalties. It successfully recovered $18 million in stolen digital assets that were part of the scheme. These funds will be returned to the defrauded investors, offering some relief to those impacted by the scam.
McGinley praised the enforcement efforts, saying, “CFTC staff not only shut down the defendants’ fraudulent schemes and obtained a money judgment of over $200 million, they also recovered more than $18 million in stolen digital assets that may otherwise have been lost forever.”
This case marks a significant win for the CFTC as it continues its mission to protect investors from crypto fraud. The recovery of assets and substantial fines should serve as a strong deterrent to those looking to exploit the crypto market for illicit gain.
