On April 3, the CFTC filed for a ruling of default after Control-Finance’s alleged founder and director, Benjamin Reynolds, did not respond to the regulator’s complaint.
CFTC unable to locate Reynolds after 10 months
The CFTC’s complaint was filed during June 2019 — alleging that Reynolds misappropriated at least 22,858 BTC from more than 1,000 customers from May 1, 2017.
In January 2020, the SEC requested additional time to locate Reynolds amid an ongoing investigation in South Korea.
During July 2019 the regulator had attempted to serve Reynolds at two addresses associated with the scheme’s director, later learning from Control-Finance investors that the accused may be situated in Korea.
The CFTC simultaneously filed a notice of voluntary dismissal without prejudice against Control-Finance.
Ponzi scheme does away with $147 million
The CFTC’s complaint alleges that Control-Finance claimed to divert customer funds to the trading operations of its expert employees while diverting new depositors’ funds to the scheme’s previous investors to create the illusion of profits and build hype.
The firm constructed a pyramid scheme around a purported affiliate program, which was promoted on Twitter, Facebook, and YouTube. In September 2017, Control-Finance removed its website, ceased making affiliate payouts, and deleted advertising content from social media.
While claiming that customer funds would be returned during the following two months, the pair were the scheme was liquidating the 22,858 BTC in its possession for roughly $147 million.
Control-Finance sought to launder the funds through thousands of transactions, with the BTC ultimately arriving at wallets held with Canadian crypto exchange CoinPayments.
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