In short
- Reynolds cheated almost 170 American citizens.
- He promised to trade his cryptography using algorithmic traders and return it with a guaranteed profit.
- He’s already disappeared.
On Friday, the US Commodity Futures Trading Commission released a statement demanding that British citizen Benjamin Reynolds paid a $ 571 million fine for a coup he administered during the summer and fall of 2017.
The bulk of the penalty is a $ 429 million fine, with an additional $ 142 million to be paid as restitution to the victims.
20,000 Bitcoin it’s a lot of money. Today, with Bitcoin hovering around $ 55,000, it amounts to more than a billion dollars. In the early summer of 2017, when Reynolds started his scam, Bitcoin’s price was around $ 1,500, or just under thirty-six of its value today.
Supposedly from Manchester, northern England, Reynolds targeted some 170 US citizens through a fictional company called Control-Finance. Using a website, various social media profiles and email communications Reynolds lured them in with the misleading promise that he would trade his funds online crypto markets and return a profit to them.
He constructed an elaborate lie, telling victims that he would use “specialized virtual currency dealers who generated guaranteed commercial profits,” according to the CFTC statement.
He promptly disappeared with the digital withdrawal and has not been found since, although the CFTC sued him in January 2019.
Crypto: breeding ground for cyber attacks.
With the advent of cryptocurrencies, new forms of theft appeared quickly. In February of this year, decentralized finance (DeFi) CREAM platform $ 37 million was stolen when hackers used a complex multi-step exploit involving instant loans.
Then, in March, a compromised wallet on the Roll social money platform was emptied of its content, which was dumped for 3,000 ETH, or about $ 5.7 million at the time, sending the price of many of the tokens stolen in free fall.
With the advent of new forms of cyber crime, new forms of digital heroism are also emerging. Last year, blockchain security expert ‘samczsun’ spotted a vulnerable smart contract this left 25,000 ETH, or $ 9.6 million at the time, in sight. He secretly protected the pot and alerted its rightful owner, Lien Finance.
So the question remains: Will Benjamin Reynolds feel the penitent pain of a healthy conscience? Will he pay the fine with the CFTC? Even if he bit the bullet, he would still have half a billion Bitcoins left over for his, undoubtedly, philanthropic projects.