Coin Signals operator to pay $2.8M in restitution under settlement with CFTC
The Commodity Futures Trading Commission (CFTC) has secured a Court order against Coin Signals operator Jeremy Spence, ordering him to pay restitution of more than $2.8 million.
On November 17, 2022, the New York Southern District Court issued a judgment that approved the motion for a settlement between Spence and the CFTC. The parties have been in settlement talks for a while.
From at least in or around December 2017 through at least in or around April 2019 (the “Relevant Period”), Spence, doing business under the name “Coin Signals,” operated a virtual currency Ponzi scheme in which he fraudulently solicited individuals to invest funds in various pools that traded virtual currencies such as bitcoin and ether, each a commodity in interstate commerce.
During the Relevant Period, Spence obtained virtual currencies such as bitcoin and ether, worth more than $5 million from individuals comprising approximately 175 user accounts through fraudulent solicitations involving misrepresentations of, among other things, his trading record, assets under management, and highly profitable returns.
In fact, as Spence himself has admitted, Spence’s trading resulted in significant trading losses, and Spence caused false performance reports to be provided to customers. As in all Ponzi schemes, Spence’s payouts of supposed profits to customers in actuality consisted of other customers’ misappropriated funds.
Under the Court order entered on November 17, 2022, Spence is permanently restrained, enjoined and prohibited from directly or indirectly, in connection with any swap, or contract of sale of any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity, intentionally or recklessly:
- using or employing, or attempting to use or employ, any manipulative device, scheme, or artifice to defraud;
- making, or attempting to make, any untrue or misleading statement of a material fact or to omit to state a material fact necessary in order to make the statements made not untrue or misleading; and
- engaging, or attempting to engage, in any act, practice, or course of business, which operates or would operate as a fraud or deceit upon any person.
Spence is also permanently restrained, enjoined and prohibited from directly or indirectly:
- Trading on or subject to the rules of any registered entity (as that term is defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40));
- Entering into any transactions involving “commodity interests”.
Finally, Spence must pay restitution in the amount of two million eight hundred forty- seven thousand seven hundred forty-three dollars ($2,847,743.00) to customers.
The case was closed on November 17, 2022.