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DOJ charges exec over ‘cherry picking’ scheme involving crypto futures

October 13, 2023 Coin Telegraph

The former CEO of Systematic Alpha Management faces up to five years in prison for his role in a fraudulent scheme tied to crypto futures contracts.

The former CEO of a Miami-based investment firm has pled guilty to a conspiracy to commit commodities fraud involving crypto futures contracts and now faces up to five years in prison.

In an Oct. 12 statement, the United States Department of Justice said that Peter Kambolin, the former CEO of Systematic Alpha Management (SAM) LLC, operated a “cherry picking” scheme where he marketed his firm as offering algorithmic trading strategies involving futures contracts, including both cryptocurrencies and commodities.

However, Kambolin misrepresented to investors that his fund involved the trading of cryptocurrency futures and foreign exchange futures, when in reality, roughly half of Kambolin’s trading in each pool involved equity index futures contracts.

CEO Pleads Guilty to Transnational Scheme Involving Foreign Exchange and Cryptocurrency Futures Contractshttps://t.co/aiafUgfRS3
— Criminal Division (@DOJCrimDiv) October 12, 2023

“In doing so, Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades,” wrote the prosecutors.

Cherry picking is a fraudulent securities trading practice in which a person executes trades without assigning those trades to a particular trading account until the individual determines whether or not the trade has become profitable or suffered losses.

According to the DOJ, Kambolin defrauded investors both in the United States and abroad by depriving them of profitable trades and then using the proceeds to fund his own personal expenses including the rent for a beachfront apartment.

The proceeds of his scheme were transferred to foreign bank accounts controlled by a co-conspirator in Belarus and Dominica.

“Yesterday’s plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme, and using proceeds from the scheme to fund his own personal lifestyle,” said Assistant Inspector General for Investigations Shimon Richmond.

Following his guilty plea, Kambolin now faces a maximum penalty of five years in prison. His sentencing hearing will occur on an undisclosed date in the future.

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Do Kwon faces fraud charges from US prosecutors hours after arrest

March 23, 2023 Coin Telegraph

Coin Telegraph

The Terraform Labs CEO is now facing fraud charges in South Korea, the Securities and Exchange Commission and federal prosecutors in New York.

Terraform Labs CEO Do Kwon has been charged with fraud by United States prosecutors in New York, just hours after he was reportedly arrested in Montenegro.

The 31-year-old entrepreneur was charged with eight separate counts, including securities fraud, commodities fraud and wire fraud, according to a March 24 report from Bloomberg.

Filip Adzic, the minister of interior of Montenegro reported on March 23 that an individual suspected of being the former “cryptocurrency king,” was detained at the Podgorica airport with “falsified documents,” and authorities are awaiting official confirmation of identity.

Kwon was detained in Podgorica Airport with Hon Chang Joon while trying to fly to Dubai, Adzic stated.

South Korean prosecutors have issued an arrest warrant against Kwon, who faces a series of fraud charges and breaches of capital markets law in his home state. Interpol has also issued a red notice listing for his arrest and the United States Securities Exchange Commission (SEC) has also filed fraud charges of their own.

The charges laid against him are in relation to his alleged role in the collapse of the $40-billion Terra Luna Classic (LUNC) token and TerraClassicUSD stablecoin (USTC) in May 2022.

This is a developing story, and further information will be added as it becomes available.

commodities fraud