CFTC pushes for $27M fine to be imposed on Q3 Holdings’ principal
The Commodity Futures Trading Commission (CFTC) is pushing for a $27 million fine to be imposed on Michael Ackerman, a principal of fraudulent digital asset scheme Q3 Holdings.
This becomes apparent from a proposed default judgment submitted by the regulator at the New York Southern District Court on June 8, 2023.
The document, seen by FX News Group, proposes that Ackerman must pay a civil monetary penalty in the amount of twenty-seven million ninety-two thousand nine hundred seven dollars and seven cents ($27,092,907.70).
Pursuant to Section 6c(d)(3)(A) of the Act, 7 U.S.C. § 13a-1(d)(3)(A), Ackerman must pay restitution in the amount of twenty-seven million ninety-two thousand nine hundred seven dollars and seventy cents ($27,092,907.70).
Let’s recall that, in February 2020, the CFTC announced the filing of a civil enforcement action against defendants Q3 Holdings, LLC and Q3 I, LP and their principal, Michael Ackerman. The complaint charged the defendants with fraudulently soliciting over $33 million to purportedly trade digital assets and misappropriating a substantial portion of that total.
The complaint specifically alleges that from at least August 2017 through December 2019 defendants operated a fraudulent scheme in which they solicited funds to purportedly trade digital assets and then misappropriated those funds. The defendants engaged in numerous misrepresentations that included making claims of (i) earning customers .5% in daily trading profits and roughly 15% per month, (ii) using algorithms that generated winning trades 75% of the time, and (iii) utilizing security measures that made it impossible for any principal to transfer or withdraw customer funds.
In reality, the defendants sent only a small portion of the customers’ funds to digital asset trading accounts, did not earn the trading profits they claimed, and misappropriated funds. To conceal the fraud, the defendants provided customers with false accounting statements, newsletters containing false trading returns, and fictitious screenshots reflecting the amount of money under Q3’s management.