The price of Bitcoin has soared in recent months, from approximately $900 in January 2017 to a current price of over $15,000. But even before the 2017 increase, Bitcoin had periods where its value rose sharply. For example, in 2013, it went from about $15 to $800. Bitcoin’s short-term gains have made it a very attractive hook for would-be Ponzi scheme developers. In fall 2017, the Commodity Futures Trading Commission (“CFTC”) sued Gelfman Blueprint, Inc. (“GBI”), and GBI’s Chief Executive Officer (“CEO”) for operating a Bitcoin Ponzi scheme that allegedly defrauded investors out of more than $600,000.
In early 2014, the company’s CEO opened a Bitcoin fund and sought customers. He claimed to have a high-frequency, algorithmic, trading strategy (using a bot named “Jigsaw”) and advertised the fund as having monthly returns of 7%-11% with zero downside risk because “trading results are maximized during price drops.” He was able to attract at least 80 customers, who contributed between a few hundred dollars and tens of thousands of dollars each.Read More