FTC Scores Victory Against Alleged Cryptocurrency Schemers; Starts Blockchain Working Group

A federal court froze assets and operations of four individuals the FTC alleged engaged in cryptocurrency scams in which they “falsely promised” participants large returns if they used digital currencies to participate. Thomas Dluca, Louis Gatto and Eric Pinkston deceptively promoted Bitcoin Funding Team and My7Network, promising participants could turn $100 of investment into $80,000 in monthly income, according to FTC filings. A fourth defendant, Scott Chandler, supported Bitcoin Funding Team and another allegedly illegal scheme, Jetcoin, said the FTC. The structures ensured that “few would benefit” from investment and a majority of investors would fail “to recoup” their initial payment, FTC said. The schemes involved digital currencies like Bitcoin and Litecoin. At the request of the FTC, the U.S. District Court for the Southern District of Florida issued a temporary restraining order and froze defendants’ assets until a trial decision. The commission separately Friday said it established an agency blockchain working group, which will focus on cryptocurrency and blockchain issues. “I expect that fraudsters will repurpose old schemes to capitalize on the current glamour and mystery of cryptocurrency," said acting Chief Technologist Neil Chilson. “The FTC staff will diligently apply its expertise to identify such schemes.”