$44M Ponzi Scam Is Accused Of Taking $18M In Money

Two people and a corporation have been charged with running an illegal community pool and fraudulently soliciting $44 million scam through a “digital assets income fund.”

Sam Ikkurty, Ravishankar Avadhanam, and Jafia LLC are the defendants, with a status hearing set for May 25, 2022.

Rose City Income Fund, Rose City Income Fund II LP, and Seneca Ventures LLC are the three funds in dispute, with all assets frozen by a District Court order on May 11, 2022. The CFTC just released information.

“The CFTC seeks restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.”

According to the complaint, the defendants “solicited more than $44 million from at least 170 individuals to purchase, hold, and trade digital assets, commodities, derivatives, swaps, and commodity futures contracts” using websites and YouTube videos.

Rather of investing the funds in order to earn a passive income through staking or well-managed trading, the defendants are accused of merely reallocating cash to other users in a Ponzi scheme-like fashion.

The “defendants also moved millions of dollars to an off-shore corporation that may have transmitted monies to a foreign cryptocurrency exchange” for a total of $18 million, according to the complaint.

The websites referenced in the official complaint are currently parked, suggesting that no further investors will be susceptible to their alleged scam. According to cached versions of the site from 2021, the site claimed to have two rules:

“Rule #1: Pay investors a steady dividend of 15% per year on a
Rule #2: Remember Rule #1 GET STARTED TODAY LEARN MORE monthly basis in perpetuity”

A blog post from 2020 gives information on their “mining” activities.

A term often used by crypto scammers to con novices to the crypto space

Many people are familiar with crypto mining, but few understand what this means. Using the term “mining” is done consciously to lull investors into a false sense of security as they have heard there is money to be made in crypto mining. The post states:

“At Rose City Income Fund, we are focused on generating income for our investors. We generate income from operating digital toll-booths. These toll-booths collect fees whether the market goes high or low. We employ market-neutral strategies, that produce reliable income. One of our Portfolio holdings is Synthetix, which we were buying last year at $0.5. We got another opportunity to add more this year in March.”

Despicably, the website appears to target the elderly as it states that “retirees are unable to generate any income from their savings” yet, their fund is “focused on capital preservation.” One of the defendants recently tweeted:

“It is just horrifying to see what wrong economic incentives do to the world. ‘land of free’ has more prisoners than communist, authoritarian China which has a population that is 4 times bigger.”

The complaint outlines in fine detail how the defendants transferred funds between participants instead of investing in digital assets and staking as they had claimed. There are also records of customer funds being transferred into accounts owned and operated by the defendant’s own accounts.

Worryingly, if any of the clients’ funds were put in crypto assets, they may not be recoverable, as Ikkurty stated in March that he was “starting to like $LUNA now.” By supporting a stable coin with bitcoin, Do Kwon made a game-changing move.”

At today’s value, funds invested in LUNA or staked in Anchor Protocol have lost almost 90% of their worth. However, there is scant proof in the study that the accused Ponzi scheme invested in crypto assets on behalf of its customers.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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