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Two Florida men accused of running a multi-million dollar Bitcoin scheme have been charged by and subsequently settled with the Commodity Futures Trading Commission (CFTC) on Thursday.
The U.S. derivatives market regulator charged Randy Craig Levine and Philip Reichenthal for engaging in digital asset fraud. The duo lied to investors and conned them out of over $5 million dollars meant to buy Bitcoin in 2018.
The Commission ordered Reichenthal and Levine to pay around $5.4 million in restitution as part of the settlements, and both men were barred permanently from trading and registration with the CFTC.
Reichenthal promised investors he would buy millions of dollars worth of Bitcoin from Levine, holding on to investors’ funds until a transaction could take place. Reichenthal posed as an escrow agent using his position as a licensed attorney, the agency said.
But investors never saw a satoshi worth of Bitcoin. And that was according to the duo’s plan. When Reichenthal transferred funds to Levine, no Bitcoin ever traded hands or was disbursed. And investors’ funds were never returned.
CFTC Commissioner Kristin N. Johnson urged investors to be aware of fraudsters and stay informed about how they could possibly be deceived.
“Unfortunately, digital commodity asset or cryptocurrency-related fraud has become all too common,” she said in a statement. “Fraudsters often take advantage of individual retail customers’ fear of missing out on and interest in access to novel asset classes to perpetrate their scams.”
The CFTC’s charges follow criminal actions taken against Reichenthal and Levine, who were sentenced this past November and March, respectively. Levine received a prison sentence of nearly six years, and Reichenthal was sentenced to time served, which means time spent in custody up to his sentencing was deemed sufficient.