Nicholas Gelfman, of Brooklyn, New York, and his company, Gelfman Blueprint, Inc. (GBI), are facing federal charges following a civil enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) in the Southern District of New York. The CFTC alleges Gelfman and GBI orchestrated a Ponzi scheme involving Bitcoin investments, defrauding approximately 80 individuals out of over $600,000 between January 2014 and January 2016.
According to the CFTC complaint, Gelfman, acting as CEO and Head Trader of GBI, fraudulently solicited investments for a purported pooled commodity fund. Investors were told their funds would be used in a high-frequency, algorithmic trading strategy implemented through a program called “Jigsaw.” However, the CFTC alleges this strategy was entirely fabricated and performance reports were falsified.
The agency claims payouts to investors were not derived from legitimate trading profits, but rather from funds misappropriated from new investors – a hallmark of Ponzi schemes. Records of the “Jigsaw” trading account reportedly show infrequent and unprofitable trading, contradicting the positive gains reported to pool participants. Gelfman allegedly further attempted to conceal trading losses and the misappropriation of funds by staging a fake computer hack.
“Through its work across the Commission, and as exemplified by the work of LabCFTC, the CFTC has demonstrated its continued commitment to facilitating market-enhancing fintech innovation. Part of that commitment includes acting aggressively and assertively to root out fraud and bad actors in these areas,” stated James McDonald, CFTC’s Director of Enforcement. “As alleged, the Defendants here preyed on customers interested in virtual currency, promising them the opportunity to invest in Bitcoin when in reality they only bought into the Defendants’ Ponzi scheme.”
The CFTC is seeking restitution for defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, trading bans, and a permanent injunction against future violations of federal commodities laws. The agency received assistance in the investigation from the New York County District Attorney’s Office and the Finland Financial Supervision Authority.
The case is being handled by Gates S. Hurand, Christopher Giglio, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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