In a recent development, Jacob Orvidas, a 28-year-old man from Utah, has agreed to a settlement with the Commodity Futures Trading Commission (CFTC) over allegations of a deceptive bitcoin commodity pool scheme. The case has garnered significant attention and sheds light on the potential pitfalls and fraudulent activities in the rapidly evolving cryptocurrency market.
Orvidas’s deceptive Bitcoin commodity pool scheme
Jacob Orvidas’s involvement in the cryptocurrency market began in 2017 when he allegedly approached four individuals with an enticing investment opportunity. He promised them the chance to trade leveraged bitcoin in a commodity pool, ensuring “equal proportionate profits based on each’s contribution level.” Such a proposition seemed lucrative, especially when Orvidas claimed another client had “contributed $100,000 worth of bitcoin and cashed out at $2.7 million.” However, the CFTC has since debunked this claim, stating it false.
Furthermore, Orvidas’s communications with potential investors raised eyebrows. In a conversation with a pool participant, he was quoted saying, “Crypto trading is a joke. It’s like printing money . . . . It’s nice when you have coins to margin trade on because you can open a high leverage short, dump your bags, and make a massive profit on the short.” Such statements, while potentially enticing for novice investors, were misleading and indicative of the deceptive nature of his scheme.
The CFTC’s investigation revealed that Orvidas had made empty promises to investors, using fake spreadsheets to bolster his claims. When the time came to deliver on his promises, he fabricated reasons for his inability to pay out despite losing almost all the funds he had collected.
The settlement and its implications
After the CFTC’s findings, Orvidas decided to settle with the agency. As part of the agreement, he must pay $2 million back to the investors he deceived. Additionally, he will incur a $500,000 monetary penalty. The repercussions of his actions don’t end there. The CFTC has imposed a 10-year registration and trading ban on Orvidas, ensuring he stays away from similar ventures in the foreseeable future.
While Orvidas admitted to most of the factual findings and legal conclusions presented by the CFTC, he contested the finding about the total amount of restitution owed to the pool participants. This case wasn’t solely the effort of the CFTC. The Securities and Exchange Commission (SEC) collaborated with the CFTC, leading to Orvidas settling with the SEC over securities law violations on the same day.
A warning for potential investors
The case of Jacob Orvidas serves as a stark reminder of the potential dangers lurking in the cryptocurrency market. CFTC Director of Enforcement, Ian McGinley, emphasized the agency’s commitment to protecting ordinary people. He stated, “Protecting ordinary people has always been at the heart of the CFTC’s digital-asset enforcement program.” He added that while many digital asset cases are intricate, the Orvidas case was “a straight-up fraud: simple and old as time.” McGinley assured that the CFTC would continue using every resource to combat fraud in all its markets.
CFTC Commissioner Christy Goldsmith Romero echoed McGinley’s sentiments, cautioning investors about the potential for fraud in the crypto space. She advised potential investors to be vigilant, suggesting they check registration statuses and be wary of offers that sound “too good to be true.”
Conclusion
In the rapidly expanding world of cryptocurrency, the case of Jacob Orvidas stands as a stark reminder of the potential pitfalls and the importance of due diligence. Investors are urged to tread cautiously as digital currencies gain traction and allure. The collaboration between the CFTC and SEC, in this case, underscores the commitment of regulatory bodies to ensure a safer trading environment.
