A district court judge in Illinois has ruled in favor of the United States Commodity Futures Trading Commission (CFTC) in a crypto Ponzi case, designating two lesser-known altcoins as commodities.
The Ponzi scheme involved Sam Ikkurty from Oregon and a number of his companies. The scam duped victims by promising “steady returns” of 15% per year from investments in “digital asset commodities.”
These digital asset commodities included Bitcoin (BTC) and Ether (ETH) as well as Olympus (OHM) and KlimaDAO (KLIMA), which have been deemed as commodities in the ruling.
“The virtual currencies fall into the same general class as Bitcoin, on which there is regulated futures trading,” stated the CFTC.
KLIMA is the governance token of KlimaDAO, a decentralized autonomous organization that promotes itself as solving “coordination” problems in climate finance.
The price of Klima has plummeted by 99.9% from its 2021 all-time high. Source: CoinGecko
KLIMA is currently trading at just $3.55, a significant drop from its all-time high of $3,777 on Oct. 21, 2021, according to CoinGecko data.
OHM is the governance token of the OlympusDAO, an organization that aims to create a community-owned decentralized reserve currency.
Oregon man ordered to pay $120 million for Ponzi scheme
In a statement released on July 3, the CFTC revealed that Ikkurty assured potential investors that he only invested in stable crypto assets and exaggerated stories of his past successes to gain the confidence of investors.
However, instead of returning profits to investors, Ikkurty “ran something like a Ponzi scheme,” repeatedly misrepresenting the facts of his fund’s performance, intentionally omitting that the value of his fund fell by over 98.99% in a few months.
In addition, the order found that Ikkurty transferred a large portion of the funds to early investors to prevent them from incurring losses. This led to a shortfall of $20 million for investors in the alleged carbon offset program.
The CFTC also noted that Ikkurty had previously lost his entire personal Bitcoin holdings to a hack.
Judge Mary Rowland has ordered Ikkurty to pay over $83.7 million in restitution and $36.9 million in disgorgement.
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In May 2022, the CFTC first accused Ikkurty and Ravishankar Avadhanam of committing fraud and failing to register with their agency.
The CFTC stated that the pair used a website, YouTube videos, and other methods to solicit over $44 million from at least 170 people to trade cryptocurrencies, derivatives, and commodity futures contracts.
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Judge classifies 2 littleknown altcoins as commodities in 120M Ponzi scheme trial