Alan Friedland of Florida and his companies, Fintech Investment Group, Inc. (Fintech) and Compcoin LLC, have been ordered to pay $1.8 million in restitution and penalties for fraudulently soliciting investments in a digital asset, according to a U.S. District Court order entered in the Middle District of Florida. The Commodity Futures Trading Commission (CFTC) announced the judgment on April 7, 2022.
Friedland and his firms falsely promised customers that purchasing Compcoin would grant them access to a proprietary foreign currency (forex) trading algorithm known as ART. From approximately 2016 through 2018, they marketed Compcoin as a key to unlocking Fintech’s highly profitable trading program.
The defendants represented in marketing materials that ART was “complete in form and function” and “ready for release,” claiming its high success rate would drive demand for Compcoin. However, the CFTC found that Friedland knew customers couldn’t legally use ART until Fintech received approval from the National Futures Association (NFA) for its disclosure documents – approval that was never obtained.
Furthermore, the touted performance of ART was largely based on hypothetical results, not actual trading, and lacked the necessary disclaimer in solicitations. The NFA ultimately rejected Fintech’s risk disclosure statements, leaving Compcoin purchasers with a worthless asset.
The court order imposes a permanent injunction, barring Friedland, Compcoin LLC, and Fintech from soliciting or trading in commodity interests or registering with the CFTC. The $1.8 million penalty consists of $1.2 million in restitution to defrauded customers and a $600,000 civil monetary penalty.
The case was settled during the CFTC’s presentation of evidence at a jury trial that began on January 31, 2022. The defendants consented to the order without admitting or denying the allegations. “This matter demonstrates the CFTC will continue to focus on customer protection,” said CFTC Acting Director of Enforcement Vincent McGonagle.
Source: CFTC.gov
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