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CFTC Files Charges in $20 Million Options, Digital Asset Scheme

The Commodity Futures Trading Commission (CFTC) filed a multi-million dollar fraud action in the US District Court for the Southern District of Florida, charging three individuals and three companies with fraudulently soliciting tens of millions of customers and prospective customers to open and fund off-exchange binary options and digital asset trading accounts. These accounts traded foreign exchange currency pairs, metals, and digital assets through websites operated by unregistered binary options and digital asset brokers, CFTC claims.

The complaint charges defendants Daniel Fingerhut of Miami, and three companies that he worked with, Digital Platinum, Inc (DPI), a Florida corporation; Digital Platinum, Ltd (DPL), an Israeli company; and Huf Mediya Ltd (Huf) a Bulgarian company, as well as the control persons of all three entities, Tal Valariola and Itay Barakof Israel.

According to the complaint, beginning in at least October 2013 and continuing through August 2018, the defendants allegedly created fraudulent marketing materials which promised astronomical profits with no risk of loss and disseminated them via email spam and by making videos available online. Over 59,000 customers opened and funded trading accounts as a result of these fraudulent marketing campaigns, which generated payments of over $20 million in commissions to the defendants.

According to the complaint, the marketing materials touted fake trading performance using advertised binary options and digital asset trading software and systems. The marketing videos typically featured actors – often posing in front of props such as mansions and private jets – who falsely claimed they had become rich trading.

The complaint also charges Fingerhut with making materially false or misleading statements to CFTC staff, including while under oath, in an apparent effort to conceal the extent of his role in the fraud and to avoid producing documents. The complaint is related to a previously filed multi-million dollar retail binary options fraud action.

In its continuing litigation against the defendants, the CFTC seeks full restitution to defrauded individuals, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets.

Julie Ros

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