A federal court has ruled that Micahel Ackerman, a former New York Stock Exchange (NYSE) broker, must pay $54 million in penalties for orchestrating a cryptocurrency fraud scheme. The Commodity Futures Trading Commission (CFTC) announced this decision, revealing that Ackerman has also been banned from trading in any markets supervised by the financial watchdog. Ackerman was initially charged in 2020 for defrauding nearly 150 investors and raising $33 million by making false promises of high returns. He initially pleaded not guilty but later changed his plea in September 2021.
Restitution and Civil Monetary Penalty
The CFTC confirmed that the final order, signed on June 13, marks the conclusion of their enforcement case against Ackerman. According to the order, Ackerman is required to pay $27 million in restitution to the victims of his fraud and an additional $27 million as a civil monetary penalty for his involvement in the cryptocurrency scam.
Q3 Holdings and False Promises
Ackerman carried out his fraudulent activities through his company, Q3 Holdings, between August 2017 and December 2019. Q3 Holdings promised investors a monthly return of 15% on their investments, claiming that these returns would be generated through proprietary trading algorithms focusing on Bitcoin and other cryptocurrencies. The CFTC revealed that Ackerman managed to raise at least $33 million from over 150 investors during this period.
Misleading Investors and Personal Gain
To deceive investors about the actual state of the fund’s portfolio, Ackerman presented false screenshots and accounting statements. His partners in the scheme, James Seijas, a former Wells Fargo Advisors employee, and Quan Tran, a Florida general surgeon, were also misled as they were unaware of the true asset values. Contrary to Ackerman’s claims, only $10 million of the raised funds were actually invested. Instead of using the money for its intended purpose, Ackerman used it for personal gain, indulging in luxurious purchases such as cars, jewelry, and a $3 million beach house in Florida.
In summary, Michael Ackerman, a former NYSE broker, has been ordered to pay $54 million in penalties for running a cryptocurrency fraud scheme. The court ruling also includes a ban on Ackerman’s trading activities in markets supervised by the CFTC. Ackerman defrauded investors by making false promises of high returns through his company, Q3 Holdings. He raised $33 million from over 150 investors but only invested a fraction of the funds while using the rest for personal expenses. The CFTC’s enforcement case against Ackerman has now reached its conclusion, with the court ordering him to pay restitution to the victims and a civil monetary penalty.