CFTC Gives Fraudulent Trading Platform The Fingerhut

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The CFTC recently filed a multi-million dollar fraud action charging three individuals and three companies with fraudulently soliciting tens of millions of customers and prospective customers to open and fund off-exchange binary options and digital asset trading accounts. These accounts traded foreign exchange currency pairs, metals, and digital assets through websites operated by unregistered binary options and digital asset brokers.

The CFTC claims Daniel Fingerhut, Digital Platinum, Inc., Digital Platinum, Ltd., Huf Mediya Ltd., and persons that control the three entities, created fraudulent marketing materials which promised profits with no risk of loss and disseminated them via email spam and by making videos available online. Over 59,000 customers opened and funded trading accounts as a result of these fraudulent marketing campaigns, which generated payments of over $20 million in commissions to the defendants. According to the complaint, the marketing materials touted fake trading performance using advertised binary options and digital asset trading software and systems. The marketing videos typically featured actors—often posing in front of props such as mansions and private jets—who falsely claimed they had become rich trading.

The complaint charges Fingerhut with making materially false or misleading statements to CFTC staff, including while under oath, in an apparent effort to conceal the extent of his role in the fraud and to avoid producing documents. In its continuing litigation against the defendants, the CFTC seeks full restitution to defrauded individuals, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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