US regulators charge CabbageTech with digital currency related fraud

A digital currency trading scheme called CabbageTech is the latest bit-coin related fraud to hit investors in the cryptocurrency. CabbageTech has disappeared from the internet allegedly with customers' funds.

The US Commodity Futures Trading Commission (CFTC), has charged Patrick K McDonnell and his company CabbageTech with "fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin."

The Staten Island, New York-based CabbageTech operated under the name "Coin Drop Markets" and since around January 2017, it had promised customers real-time trading advice but failed to provide it and disappeared after receiving payment, according to the complaint.

"Defendants also solicited 'lifetime' memberships in a more exclusive trading sector that would provide greater opportunities to profit from virtual currency trading," the complaint said. "For example, one such opportunity purported to offer profits as much as 300 per cent return on an investment in less than a week."

The domain Cabbage.tech appeared for sale at $3,999, and the complaint goes on to state that the company has removed other social media materials from the internet.

"In reality, as alleged, customers only bought into the Defendants' fraudulent scheme," CFTC director of enforcement, James McDonald, said in a statement. "We will continue to work hard to identify and remove bad actors from these markets."

In another case the CFTC alleged Dillon Michael Dean of Colorado, and his UK-registered company Entrepreneurs Headquarters Ltd, operated a Ponzi scheme in which he solicited $1.1 million in bitcoin from over 600 investors, promising to pool and invest their cash.

According to commentators, the enforcement actions come as the first by the CFTC since it allowed the launch of bitcoin futures in December, which led to criticism in Wall Street that the agency should have sought wider industry feedback ahead of the move (See: CBOE to get head start in bitcoin futures race; CME close behind).