US regulators have cracked down yet another crypto Ponzi scheme in the state of Washington. According to the official announcement on December 11th, a civil enforcement action against a state Pastor Francier Obando Pinillo was announced by the Commodity Futures Trading Commission in the US District Court for the Eastern District of Washington.
The case comes as crypto Ponzi schemes worldwide have seen a rise due to multiple factors, making regulators alter and vigilant about the scams.
Washington State Pastor Alleged On $6 Million Ponzi Scheme
According to the official announcement, Pastor Francier Obando Pinillo, acting as Solanofi entities—is facing a civil enforcement action from the Commodity Futures Trading Commission in the US District Court for the Eastern District of Washington for participating in a fraudulent multilevel marketing scheme involving digital assets valued at at least $5.9 million.
Pastor Francier Obando Pinillo was allegedly running a crypto Ponzi scheme that has defrauded thousands.
Members of a Spanish church in Pasco, Washington, where Pinillo served as pastor, were among the minimum of 1,515 clients he targeted in the United States.
Restitution to defrauded consumers, disgorgement of ill-gotten gains, civil monetary penalties, trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations are all part of the CFTC’s ongoing litigation against him.
What is a Crypto Ponzi Schemes?
A Ponzi scheme is an investment fraud in which money contributed by new investors is used to pay out alleged returns to current investors.
Ponzi scheme operators frequently entice new investors by offering to invest money in ventures that are said to offer large returns with little to no risk.
Instead of making any real investments, the scammers in many Ponzi schemes concentrate on luring new investors in order to fulfill their promises to previous investors and take some of the “invested” money for their own purposes.
Why Are Crypto Ponzi Schemes Rising?
Crypto Ponzi schemes have seen skyrocketing growth in parallel to the growth of crypto market, especially in the US.
A variety of factors contribute to the growth of Ponzi schemes, a form of fraud, with the main cause being absence of rules. Controlling Ponzi schemes can be challenging in developing nations due to lax regulatory frameworks. Regulators might not have the political clout, resources, or instruments necessary to enforce financial misconduct.
Additionally, those who are overconfident, optimistic, or suffer from confirmation bias may be more prone to invest in Ponzi schemes. They might disregard facts or information regarding the plan and rely upon trust factor as seen in today’s case.
Last but not the least, operators of Ponzi schemes may employ a number of strategies, such as fabricating account statements or fabricating events, to keep the appearance of success, deceiving people of their money.