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Man Pleads Guilty to Defrauding Crypto Investors of $195,000

Mcdonnel pleads guilty of USD 195,000 fraud

Staten Island-based CabbageTech‘s head Patrick Mcdonnel, who went by the name Jason Flock, pleaded guilty to fraud at a federal courthouse in Brooklyn in connection to a Ponzi-like scheme which involved the exchange of Bitcoin, Litecoin and other cryptocurrencies.

The investors were given false claims of massive profits of up to 300% in less than a week along with trading recommendations and brokering of digital coin purchases. They were further lured into the belief that Mcdonnel would provide trade recommendations and crypto asset purchases. 

The scheme commenced in November 2014 and ran till January 2018 wherein investors were deceived with false balance sheets to make their venture seem more profitable. United States Attorney General Donoghue stated:

“McDonnell has admitted that he used old-fashioned deception to defraud investors seeking to trade 21st century currencies. This Office and our law enforcement partners will continue to prosecute those who swindle the investing public to the full extent of the law.”

Mcdonnel took to social media to lure clients into believing that his firm had already traded over USD 50 million worth of Bitcoin. He defrauded at least ten victims of about USD 195,000. He gave the investments of the new investors as profits to the old investors creating an inevitable chain of recommendations keeping the investments consistent, at least for a while.

The principal investment was lost in “personal use”. The company initially delayed their repayment giving excuses. Eventually, they also deleted their website and other social media accounts.

If convicted, Mcdonnel will have to face up to 20 years in jail along with forfeiture and restitution to his victims. 

Crypto scams are increasing more than ever especially in the bull run where scammers take advantage of the vulnerability of the people. Last year alone, crypto scams in Australia capped USD 4.3 million.  Earlier this month, the Commodity Futures Trading Commission  (CFTC) rolled out enforcement action against an allegedly fraudulent Bitcoin investment scheme of USD 147 million. is committed to unbiased news and upholding journalistic codes of ethics. For more information please read our Editorial Policy here.

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Bakkt to Test Bitcoin Futures and Custody in July

Bakkt to Test Bitcoin Futures and Custody in July

Institutional grade cryptocurrency platform Bakkt may have caught a lucky break yet after a slight bump in its initial launch schedule, as it plans to kick off with its user acceptance testing (UAT) for bitcoin futures custody and trading.

CEO of Bakkt Kelly Loeffler issued an update on the launch strategy in a blog post. She noted that collaboration with ICE Futures US and ICE Clear US was in the works to help launch Bakkt’s Bitcoin futures contracts and expressed optimism on the test launch scheduled for July:

“In conjunction with our exchange and clearing partners at ICE, we’ll be working with our customers over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody, which we expect to start in July.”

After a long delay in the launch of the platform, which was essentially due to the US Commodity Futures Trading Commission’s (CFTC) concern over the proposed platform’s custody protocol. However, it appears they are making headways in that direction. Moreover, Loeffler hinted Bitcoin futures will be listed on a federally regulated futures exchange in the coming months. She further remarked:

“We’ve worked closely with the CFTC to develop contracts that both meet our customers’ needs for trading, transparency, and market certainty, and are also compliant with Federal regulations.”

As a matter of update to the Bitcoin futures product, Loeffler clarified certain security and risk management modifications made to the contract which emerged as a result of conversations with stakeholders.

These updates include the formation of two new futures contracts to be listed – a daily and monthly settlement, tools to effectively monitor aberrant prices, a USD 35 million contribution by Bakkt into the clearinghouse, and an integrated custody service subject to regulatory approval.

Although no specific date has been announced, it appears that should the CFTC find no problem with Bakkt’s proposal to self-certify through its parent company, ICE, the outcome would be a major milestone for the project.

In April, the Intercontinental Exchange (ICE) was reportedly seeking a New York license to facilitate the Bakkt’s launch, considering that the license grants the platform permission from New York’s Department of Financial Services to hold tokens.


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US Reintroduces Token Taxonomy Act Bill to Clarify Crypto Status

US Reintroduces Token Taxonomy Act Bill to Clarify Crypto Status

A bill designed to exclude cryptocurrencies being defined as securities has been reintroduced for consideration by representatives in the United States House of Representatives.

Warren Davidson (R) and Darren Soto (D) representatives in the United States House of Representatives, introduced the bill, the Token Taxonomy Act last December in an attempt to amend the Securities Act of 1933 and the Securities Act of 1934 to exclude cryptocurrencies.

The new bill has some carefully chosen amendments included; it clarifies the jurisdictions of the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC) and attempts to challenge the right for jurisdictions to make what it calls “heavy-handed” regulations.

Soto, a long-time champion of blockchain, said that “it is time for the United States to step up and lead in blockchain technology”. He said:

“After months of public input, our Token Taxonomy Act and the Digital Taxonomy Act add critical definition and jurisdiction to create certainty for a strong digital asset market in the United States.  This is an important step to promoting innovation and maximizing the potential of virtual currencies for the US economy, all while protecting customers and the financial well-being of investors.”

Washington has seen a wave of lobby groups campaigning to promote blockchain technology over the past 12 months, to the extent that these number swelled, tripling over the course of 2018, with 33 projects in place by the close of 2018. Much of the growth is thought to be driven by an increase in securities regulation activity by government departments such as the SEC.


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