The Federal Trade Commission (FTC) has announced that the agency had obtained a federal court order halting the activities of three online cryptocurrency companies the agency has accused of deceptive business practices. The court order came in response to a sealed civil complaint filed by the FTC in February. That complaint identified four individuals whose cryptocurrency-related companies all did at least part of their business in South Florida.
The three companies affected by the order are Bitcoin Funding Team, Jetcoin, and My7Network. The agency has accused them of being “deceptive cryptocurrency schemes.” These alleged scams all involved false promises of substantial returns for those who enrolled in the companies’ programs using Bitcoin or Litecoin.
The two-count complaint accused the defendants of misrepresenting the nature of their programs, and of making false representations about participants potential for earning a substantial return.
“Defendants promoted participation in programs that are characterized by the payment of consideration by a new recruit to other participants in the program, in return for which the recruit obtains the right to receive compensation for recruiting others into the program.
Through promoting its programs, Defendants have represented, directly or indirectly, expressly or by implication, that Defendants' programs are structured to operate as bona fide money-making opportunities.
In truth and in fact, Defendants' programs are not structured to operate as bona fide money-making opportunities, but instead operate as chain referral schemes, which by their nature, result in a substantial percentage of participants losing money. “
Chief U.S. District Judge K. Michael Moore acted in response to the FTC’s complaint, issuing a restraining order against the four defendants. In addition, the court moved to freeze the defendants’ assets while they await trial.