A New York court has defaulted judgment against Blake Harrison Kantor and Nathan Mullins in a fraudulent binary options scheme involving the virtual currency ATM Coin, the Commodity Futures Trading Commission (CFTC) announced November 1, 2019. The case, brought by the CFTC’s Virtual Currency Task Force, also implicated four corporate entities: Blue Bit Banc (UK), Blue Bit Analytics, Ltd. (Turks and Caicos), Mercury Cove, Inc. (NY), and G. Thomas Client Services (NY).
The U.S. District Court for the Eastern District of New York ordered the defendants to pay a combined $4.25 million. This includes $846,405 in restitution, a $2.5 million civil penalty against Kantor and the corporate entities, and a $300,000 penalty against Mullins. Kantor and Mullins were also ordered to disgorge $515,759 and $89,574 in ill-gotten gains, respectively. Additionally, Blue Wolf Sales Consultants, a New York company owned by Kantor, must disgorge $463,097.
The court found that Kantor, Blue Bit Analytics, and G. Thomas Client Services illegally acted as unregistered Futures Commission Merchants. The order permanently bans the defendants from violating the Commodity Exchange Act.
The CFTC initially filed the enforcement case on April 16, 2018, alleging the defendants defrauded investors through a binary options scam. Investors were solicited with promises of predetermined payouts based on commodity prices. However, the defendants utilized a fraudulent software program that manipulated data, favoring Blue Bit Banc and disadvantaging investors. Funds were often directed to a bank account in St. Kitts and Nevis, obscuring the trail of investor money. The defendants also converted investments into ATM Coin, a cryptocurrency Kantor misrepresented as having substantial value.
In a related criminal case, Kantor pleaded guilty to conspiracy to commit wire fraud and obstruction of justice. He was sentenced to 86 months in prison.
The CFTC warns that restitution orders do not guarantee full recovery of lost funds. The agency states it will continue to pursue accountability for fraudulent actors and protect customers.
The CFTC acknowledged the assistance of the U.S. Attorney’s Office for the Eastern District of New York, the FBI’s New York Field Office, and IRS Criminal Investigation.
Source: CFTC.gov
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