(HedgeCo.Net) The Commodity Futures Trading Commission has issued an order simultaneously filing and settling charges against Jacob Orvidas. The order finds Orvidas fraudulently solicited at least four people (pool participants) to trade leveraged bitcoin in a commodity pool, lost almost all funds trading, and then lied to pool participants about the losses and the availability of their money. The order also finds Orvidas failed to register as a commodity pool operator.
The order requires Orvidas to pay over $2 million in restitution and a $500,000 civil monetary penalty and to cease and desist from further violating the Commodity Exchange Act, as charged. In addition, the order imposes 10-year registration and trading bans against Orvidas.
“Protecting ordinary people has always been at the heart of the CFTC’s digital-asset enforcement program,” said Director of Enforcement Ian McGinley. “While digital-asset cases are often complex, this bitcoin case is a straight-up fraud: simple and old as time. We will continue to deploy every weapon in our arsenal to fight fraud in all our markets.”
From approximately October 2017 through at least July 2020, Orvidas fraudulently solicited at least four pool participants to trade leveraged bitcoin on their behalves in a commodity pool. Orvidas misrepresented his own trading prowess and falsely promised pool participants outlandish profits and that their money would be protected. For example, Orvidas told one pool participant that another client contributed $100,000 worth of bitcoin and cashed out at $2.7 million, and that “[c]rypto trading is a joke . . . [i]t’s like printing money . . . .,” all of which were false. Based on these and similar claims, pool participants contributed over $2 million to Orvidas’ commodity pool, after which Orvidas lost nearly all funds trading. To cover up those losses, Orvidas provided pool participants fictitious spreadsheets purporting to reflect trading profits and high account balances and lied about why he could not pay those profits out and return principal. As a result, pool participants lost over $2 million.