United States CFTC Orders Sam Ikkurty & Related Entities to Pay $209 Million for Carbon & Crypto Ponzi Scheme, Sam Ikkurty Had Fled to India But CFTC Managed to Recover $18 Million
8th September 2024 | Hong Kong
The United States Commodity Futures Trading Commission (CFTC) has ordered Sam Ikkurty & related entities to pay $209 million (fine, penalty disgorgement & reimbursement of expenses) for carbon investment & crypto Ponzi scheme. Sam Ikkurty had fled to India but the CFTC managed to recover $18 million. United States CFTC (3/9/24): “The Commodity Futures Trading Commission today announced Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois entered an order of final judgment against Sam Ikkurty of Oregon and Jafia, LLC, Ikkurty Capital, LLC d/b/a Rose City Income Fund I LP, Rose City Income Fund II, and Seneca Ventures, LLC imposing a judgment totaling $209,614,892. This order follows Judge Rowland’s prior order granting summary judgment in favor of the CFTC on all counts of the CFTC’s solicitation fraud and misappropriation complaint. [See CFTC Press Release No. 8931-24] The CFTC also recovered more than $18 million in digital assets that had been stolen from the court-appointed receiver. The court’s order of final judgment and permanent injunction requires the defendants to pay $83,757,249 in restitution to customers of the so-called income fund; $36,967,285 in disgorgement of unlawful gains (offset by any amounts paid in restitution); and a $110,901,855 civil monetary penalty. The order also orders Ikkurty to pay an outstanding $14,071,000 contempt fine, following the court’s finding he unlawfully transferred digital assets from the Receivership Estate while this lawsuit was pending and violated a court order, as well as ordering Ikkurty to repay $884,788 in professional expenses advanced from the Receivership Estate to fund his defense. The order also permanently bans Ikkurty and Jafia from registering with the CFTC; trading any digital assets or other commodity interests; soliciting or accepting any funds for the purpose of purchasing digital assets or commodity interests; and engaging in conduct that violates the Commodity Exchange Act (CEA) and CFTC regulations. Case Background – As described in the summary judgment order, the defendants’ fraudulent scheme centered on Ikkurty’s misrepresentations to participants about the nature of his “crypto hedge funds” and the supposed “net profits” they would earn. In reality, Ikkurty did not return any net profits to participants, and instead “ran something akin to a Ponzi scheme.” Ikkurty also misstated his fund’s historical performance and omitted the fact the fund fell in value by 98.99% in only a few months. The order also found Ikkurty invested in unstable digital asset commodities contrary to his promises to participants, and his purported crypto expertise was a sham because his actual experience with digital assets consisted solely of losing his personal Bitcoins to a hack. The court soundly rejected Ikkurty’s claim that his misrepresentations about historical performance were inadvertent and his arguments that his false statements were not material. Notably, in addition to the misrepresentations, the summary judgment order also found the defendants misappropriated funds through a carbon offset program, which the order described as “a classic Ponzi scheme.” During this lawsuit, millions of dollars in digital assets recovered from Ikkurty and held by the court-appointed receiver to compensate victims were stolen in a hack. The court held Ikkurty, who had fled to India, in contempt for stealing and refusing to return these assets. However, the CFTC found the assets and on August 27 caused them to be returned to the receiver to give to victims in accordance with the court’s order. The recovered assets are currently valued at approximately $18 million. The CFTC cautions that orders requiring repayment of funds to victims may not always result in the recovery of lost money because the wrongdoers may not have sufficient funds or assets.”
“ United States CFTC Orders Sam Ikkurty & Related Entities to Pay $209 Million for Carbon & Crypto Ponzi Scheme, Sam Ikkurty Had Fled to India But CFTC Managed to Recover $18 Million “
Director of Enforcement Ian McGinley: “The defendants portrayed their programs as cutting-edge crypto and carbon investments when in reality they were plain, old-fashioned Ponzi schemes. CFTC staff not only shut down the defendants’ fraudulent schemes and obtained a money judgment of over $200 million, they also recovered more than $18 million in stolen digital assets that may otherwise have been lost forever. This is an outstanding result for the CFTC and for the victims of defendants’ fraud.”
United States CFTC Orders Sam Ikkurty & Related Entities to Pay $209 Million for Carbon & Crypto Ponzi Scheme, Sam Ikkurty Had Fled to India But CFTC Managed to Recover $18 Million
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