Company and Its Principal Charged in $33 Million Digital Asset Scheme

Company and Its Principal Charged in $33 Million Digital Asset Scheme

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CFTC Charges Q3 Holdings, LLC, Q3 I, LP and Michael Ackerman With Fraudulently Soliciting More Than $33 Million From Customers

Kehoe Law Firm, P.C. is making investors aware that on February 11, 2020, the CFTC announced the filing of a civil enforcement action in United States District Court for the Southern District of New York against defendants Q3 Holdings, LLC and Q3 I, LP and their principal, Michael Ackerman (“Ackerman”). The complaint charges the defendants with fraudulently soliciting over $33 million to purportedly trade digital assets and misappropriating a substantial portion of that total.

The CFTC’s complaint alleges that from at least August 2017 through December 2019, defendants operated a fraudulent scheme in which they solicited funds, purportedly, to trade digital assets and then misappropriated those funds. The defendants engaged in numerous misrepresentations that included making claims of (i) earning customers .5% in daily trading profits and roughly 15% per month, (ii) using algorithms that generated winning trades 75% of the time, and (iii) utilizing security measures that made it impossible for any principal to transfer or withdraw customer funds.

In reality, the defendants sent only a small portion of the customers’ funds to digital asset trading accounts, did not earn the trading profits they claimed, and misappropriated funds. To conceal the fraud, the defendants provided customers with false accounting statements, newsletters containing false trading returns, and fictitious screenshots reflecting the amount of money under Q3’s management.

In separate actions, the U.S. Attorney’s Office for the Southern District of New York announced the arrest of Ackerman on one count of wire fraud and the Securities and Exchange Commission announced the filing of a multi-count complaint against Ackerman and Q3 alleging securities fraud and misappropriation.

Source: CFTC.gov

Kehoe Law Firm, P.C.