Federal Court Levies 36 Million Penalty in Case of Cryptocurrency Fraud

TLDR
Federal court fines New York resident William Koo Ichioka $36 million for crypto investor fraud
Scheme ran from 2018, promising 10% returns every 30 business days
Ichioka must pay $31 million in restitution and a $5 million civil penalty
He used investor funds for personal expenses like rent, jewelry, and luxury vehicles
The CFTC banned Ichioka from trading in regulated markets in August 2023
A federal court has imposed a $36 million fine on William Koo Ichioka, a New York resident, for orchestrating a cryptocurrency and foreign exchange investment fraud scheme.
The case, brought by the U.S. Commodity Futures Trading Commission (CFTC), highlights the ongoing efforts of regulators to combat fraudulent activities in the rapidly evolving cryptocurrency market.
According to the CFTC
, Ichioka’s scheme began in 2018 and involved soliciting funds from investors with promises of significant returns.
Specifically, he claimed investors could expect “10% returns every 30 business days” on their investments. This type of high-yield promise is often a red flag for potential fraud in the investment world.
While Ichioka did invest some of the funds into foreign currencies and cryptocurrencies as promised, the CFTC alleges that he also misappropriated a significant portion of the money for personal use.
Court documents reveal that Ichioka used investor funds to cover personal expenses, including rent for his residence, jewelry, watches, and luxury vehicles.
The judgment, handed down by U.S. District Court Judge Vince Chhabria, orders Ichioka to pay $31 million in restitution to the victims of his fraudulent scheme.
This amount represents the bulk of the total fine and is intended to compensate those who lost money due to Ichioka’s actions. In addition to the restitution, Ichioka must also pay a $5 million civil monetary penalty.
This ruling follows an earlier consent order of permanent injunction against Ichioka, which the court entered in August 2023. That order banned Ichioka from trading in any markets regulated by the CFTC and prohibited him from registering with the commission in the future. These measures aim to prevent Ichioka from engaging in similar fraudulent activities in the future.
The case against Ichioka is part of a broader trend of regulatory actions targeting individuals who make false promises of high returns in the cryptocurrency space.
In May 2024, the U.S. Department of Justice charged crypto personality Thomas John Sfraga with wire fraud for promising investors returns as high as 60% in three months.
Similarly, in February, the U.S. Securities and Exchange Commission brought charges against crypto trading course instructor Brian Sewell for misleading students into investing in a hedge fund with promises of lucrative returns.
These cases underscore the growing concern among regulators about the rise in cryptocurrency-related fraud. A recent report cited by the CFTC indicates that Americans lost $5.6 billion due to cryptocurrency fraud in 2023, marking a 45% increase from the previous year.
The report also found that crypto-related complaints represented 10% of all complaints received by the FBI’s Internet Crime Complaint Center but accounted for nearly 50% of the total financial losses reported.
Particularly concerning is the finding that individuals over 60 years old were the most frequently victimized group, accounting for almost $1.6 billion of the losses.
This statistic highlights the vulnerability of older investors to cryptocurrency scams and the need for targeted education and protection measures.
The CFTC’s action against Ichioka serves as a reminder to investors to exercise caution when considering cryptocurrency investments, especially those promising unusually high or guaranteed returns.


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