The United States Federal Trade Commission has announced that it will refund about 8,000 individuals who were victims of two reported Bitcoin scams.
According to the FTC, the victims were cajoled into joining the platforms out of the need to double their income as the perpetrators promised them about 800% returns.
The perpetrators asked the victims to register on their platform and sit back while their funds work for them while promising them a return of nothing less than $80,000 at the end of every month. In its statement, the FTC said it as already begun returning the funds to users who were victims of the Bitcoin Funding Team and My7network scams.
Promoters received payments in Bitcoin and Litecoin from victims
Furthermore, the US FTC claimed that in order not to be traceable, the perpetrators asked their investors to send their funds to the platform using only Bitcoin and Litecoin. “Both scam networks were run in a referral mode, which required already registered users to bring more people into the platform to increase their profits.
The majority of those that invested in the platform have not received their initial investments,” the FTC said. The FTC further revealed that it would send a total of $470,000 in about 7,964 different transactions to victims starting from November 5.
The FTC further noted that the average fee of $59 per victim would be sent to their PayPal accounts, and they have a grace of up to 30 days to accept the cash payments. According to the FTC records, the platform was initially under the radar in March 2018; after its leading promoters Thomas Dluca, Louis Gatto, and Eric Pinkston were arrested.
The FTC said the members claimed that they could invest $100 in Bitcoin return a yield of $80,000 in just one month. Notably, the two schemes were pyramid schemes where members would increase their earnings depending on the number of people who sign up under them.
Perpetrators levied with hefty fines
The FTC further said that Scott Chandler, another member of the arrested group, was promoting the illegal platform and a new digital asset called Jetcoin. Despite the group’s claims that the investors would receive their yields in 30 days, no payments have been made to any investor in the last two months.
The arrested culprits were said to have violated an Act in the FTCS rule, which states that deceptive acts such as referral schemes are highly prohibited.
The culprits were said to have settled their way out of a case with FTC last year but were not granted that favor this year as the FTC announced that the members would pay hefty fines. Dluca would pay $453,932 for his part in the operation, while Chandler will pay $31,000.
Pinkston was also asked to pay a sum of $461,035 but could pay only $29,491 as he could not afford the full amount. The regulator says that if investigations show that Pinkston lied to the court about his worth, he would be asked to complete the initial payment. The FTC has also barred the perpetrators from involving in anything related to pyramid or referral schemes in the future.