The Commodity Futures Trading Commission (CFTC) today filed a complaint against Armen Temurian and Vista Network Technologies (Defendants), in the U.S. District Court for the Eastern District of New York. The complaint alleges that Defendants lured investors into their fraudulent digital asset scheme by promising to trade the Bitcoin and Ether that investors deposited and ensure a daily 2.5% return. These fraudsters also promised that investments would “double in value within eighty days.” Once more and again, false promises, fake investments, and disturbing losses suffered by unsuspecting investors.
In total, investors transferred over 750 Bitcoin and 2,000 Ether to Defendants worth more than $7 million. Defendants never traded a single digital asset entrusted to them by investors. They never developed investment strategies nor identified investment opportunities. There was no basis for their claims that they could achieve the promised returns. Instead, Defendants deployed a scam that we have long described as a plain, old, Ponzi scheme—taking the money of new investors to old investors and recharacterizing the converted investment funds as “profits.”
In a recent statement related to a different matter, I explained:
This age-old sleight of hand gained its contemporary moniker “Ponzi scheme” from the 1920’s financial fraud perpetuated by Charles Ponzi.[1] For proof of the enduring and pernicious legacy of fraudsters such as Ponzi and his predecessors, recall the revelation of Bernie Madoff’s $50 billion Ponzi scheme.[2] Prosecutors continue to work today—a decade after Madoff confessed that his investment advisory fund was “all just one big lie” —to compensate victims.[3]
I have long been concerned about the potential for fraud in digital asset markets.[4] While we will continue to serve as a cop on the beat policing markets for anti-fraud and market manipulation in accordance with our statutory authority, it is imperative that all members of the public to stay informed about the potential scams and abuses in digital assets markets by visiting our investor advisory page.[5] Fraudsters offering guaranteed, or unusually high, returns—or both—should in particular prompt scrutiny and additional diligence before transferring any funds.
I would like to recognize the Division of Enforcement staff bringing this litigation: San Wasserman, Katie Rasor, Mike Cazakoff, Steven Ringer, Lenel Hickson, Jr., and Manal Sultan.
[1] In addition to careful academic scholarship and investigative journalism revealing the impact of Charles Ponzi’s scheme, popular television and film continue reference Ponzi’s scheme. For example, one finds colorful explanations of Ponzi’s scheme and descriptions of investors who suffered losses as a result of the scheme in Comedy Central, Drunk History, “Scoundrels,” Downton Abbey; and Boardwalk Empire.
[2] Diana Henriques, The Wizard of Lies: Bernie Madoff and the Death of Trust (2011).
[3] See U.S. Dep’t Just., Justice Department Announces Total Distribution of Over $4 Billion to Victims of Madoff Ponzi Scheme, Sept. 28, 2022, https://www.justice.gov/opa/pr/justice-department-announces-total-distribution-over-4-billion-victims-madoff-ponzi-scheme.
[4] See, e.g., Keynote Address of Commissioner Kristin Johnson at UC Berkeley Law Crypto Regulation Virtual Conference, Feb. 8, 2023, https://www.cftc.gov/PressRoom/SpeechesTestimony/opajohnson3; Keynote Address of Commissioner Kristin Johnson at Digital Assets @ Duke Conference, Duke’s Pratt School of Engineering and Duke Financial Economics Center, Jan. 26, 2023, https://www.cftc.gov/PressRoom/SpeechesTestimony/opajohnson2; Statement of Commissioner Kristin N. Johnson Regarding CFTC Action Against Market Manipulation Scheme in the Digital Assets Markets, Jan. 9, 2023, https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement010923; Statement of Commissioner Kristin N. Johnson Regarding CFTC Consent Order of $2.8 Million in Restitution for Virtual Currency Fraud, Dec. 1, 2022, https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement120122.
[5] See CFTC Customer Advisory: Be Alert and Share Information to Help Seniors Avoid Fraud (issued June 15, 2022); CFTC Customer Advisory: Avoid Forex, Precious Metals, and Digital Asset Romance Scams (issued Feb. 2, 2022); CFTC Investor Alert: Watch Out for Fraudulent Digital Asset and "Crypto" Trading Websites (issued Apr. 26, 2019); CFTC Customer Advisory: Use Caution When Buying Digital Coins or Tokens (issued July 16, 2018); CFTC Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes (issued Feb. 15, 2018); CFTC Customer Advisory: Beware "IRS Approved" Virtual Currency IRAs (issued Feb. 2, 2018); CFTC Customer Advisory: Understand the Risks of Virtual Currency Trading (issued Dec. 15, 2017), https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/index.htm.
