A federal
court has ordered Abner Alejandro Tinoco and his company Kikit & Mess
Investments, LLC to pay over $31 million in penalties for orchestrating a
fraudulent foreign currency and cryptocurrency investment scheme, the Commodity
Futures Trading Commission (CFTC) announced last week.

CFTC Wins $31 Million
Judgment in Texas Crypto Fraud Case

Senior
Judge David C. Guaderrama of the US District Court for the Western District of
Texas issued the order on July 9, requiring Tinoco and Kikit & Mess to
jointly pay $6.2 million in restitution to 199 defrauded victims, $6.3 million
in disgorgement, and an $18.8 million civil monetary penalty.

The court
had previously entered a consent order in March 2022 permanently banning Tinoco
and his firm from trading in CFTC-regulated markets and registering with the
agency. That order found the defendants had fraudulently solicited over $7.2
million from clients starting in September 2020, operating what the CFTC
described as akin to a Ponzi scheme.

“The order
found the defendants did not invest their clients’ funds as represented and
instead used them to pay Tinoco’s personal expenses including the travel costs
for chartering a private jet, the purchase of a luxury mansion and other real
estate,” the CFTC statement said.

In a
parallel criminal case, Tinoco pleaded guilty to five counts of wire fraud and
was sentenced in February to 84 months in prison. He is currently serving his
sentence at a federal correctional facility in Arizona.

The CFTC
urges the public to exercise caution and verify registration status before
investing funds with individuals or companies. Suspected violations can be
reported to the CFTC’s Division of Enforcement online
tip system.

The Endless Saga of
Financial Pyramids

The
cryptocurrency and Forex markets continue to be prime hunting grounds for
fraudsters seeking to deceive retail investors and savers. Earlier this month, Finance
Magnates reported on a similar case where investors lost $83.7 million. Sam
Ikkurty and associated companies were ordered to pay $121 million for allegedly
running a pyramid scheme that promised 15% annual returns on Bitcoin
investments.

In mid-May,
the Commodity Futures Trading Commission (CFTC) reached a settlement with
FalconX, a crypto prime brokerage firm. The company was fined $1.8 million for
failing to register as a futures commission merchant (FCM) and was ordered to
stop providing services to U.S. residents.

Concurrently,
the market watchdog issued a strong caution to students and young job seekers
about the risks of inadvertently becoming “money mules” in
cryptocurrency-related schemes.

March saw US
federal prosecutors bringing charges against the cryptocurrency exchange KuCoin
and two of its founders for alleged violations of anti-money laundering (AML)
laws. The indictment claims that KuCoin operated within the United States
without proper registration and lacked an adequate AML program.