U.S. government files first major lawsuit against Bitcoin scheme since it took down the Silk Road

by Kenneth Schortgen, Daily Economist:

On Sept. 25 a lawsuit was filed in Federal court against a company whom the government claims was conducting a ponzi scheme which used Bitcoin as the primary asset.

According the CFTC, Gelfman Bluepring, INC fraudulently solicited over $600,000 from unsuspecting investors in a ponzi scheme involving the cryptocurrency Bitcoin.  And while this is not the sole Bitcoin based lawsuit to come before a court in the U.S. since the Feds took down the Silk Road several years ago, it is the first major indictment at the Federal level since that time.

Bitcoin ponzi.jpg
According to a report by CNN Money, the U.S. Commodity Futures Trading Commission (CFTC) announced this week that it would file suit against a man and his New York-based company over an alleged Ponzi scheme involving bitcoin. This marks a historic (or perhaps notorious) first: the first time that the U.S. government has filed a fraud suit involving bitcoin, the world's leading cryptocurrency. The individual in question is Nicholas Gelfman of Brooklyn, New York, and the related company is a fund called Gelfman Blueprint, Inc. According to the CFTC, the fund "fraudulently solicited more than $600,000 from approximately 80 persons." 
Classic Ponzi Strategy 
Per the allegations in the suit, the CFTC has suggested that Gelfman, who has been CEO and head trader for the fund, told investors that his firm "employed a high-frequency, algorithmic trading strategy." At the same time, however, the strategy itself was "fake," according to the filing. "The purported performance reports were false, and -- as in all Ponzi schemes -- payouts of supposed profits...actually consisted of other customers' misappropriated funds," the CFTC reported in a statement. The suit further alleges that Gelfman attempted to stage a computer hack as a means of concealing the scheme. - Investopedia

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