The case brought by the United States Commodity Futures Trading Commission (CFTC) against fraudulent digital asset scheme Q3 Holdings and its principal Michael Ackerman is getting closer to a conclusion. This is indicated by a proposed default judgment submitted by the regulator at the New York Southern District Court on January 7, 2021.

The document, seen by FX News Group, stipulates the penalties sought by the Commission in this case. According to the proposed default judgment, the defendants will have to pay a civil monetary penalty in the amount $81,278,723.10. Furthermore, the defendants will have to pay restitution of $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.