The United States Commodity Futures Trade Commission (CFTC) has filed a complaint against Florida resident Alan Friedland for fraudulently raising $1.6 million through a cryptocurrency tied to a forex trading scheme.
The April 16 filing accuses Friedland and his companies Fintech Investment Group, Inc and Compcoin LLC of illegally soliciting investments and publishing “untrue and materially misleading” press materials for its digital asset Compcoin from 2016 until 2018.
The defendant claimed that Compcoin would allow customers to access Fintech’s proprietary trading algorithm ART and would deliver high returns on investment.
Friedland falsely claimed that ART’s profit potential had been based on eight years of testing. However, Compcoin investors were never given access to ART and were left holding a worthless cryptocurrency.
The regulator is seeking restitution, civil penalties, a permanent registration ban, and a permanent injunction against further CFTC violations.
The complaint alleges that the defendants misrepresented ART and Compcoin as “ready for release on the open market” despite Friedland being aware that approval from the National Futures Association (NFA) was required. The CFTC stated:
“Prior to the purchase of Compcoin by anyone, defendants knew that Compcoin could not be used by customers to gain access to ART because Fintech had not been approved to advise customers as to trading forex using ART.”
The complaint went on to say:
“The NFA advised defendant Fintech in writing that the forex trading disclosure documents, which Fintech had submitted to the NFA for approval, were deficient and could not be used to solicit customers for forex trading using ART until acceptable disclosures were filed with, approved and accepted by the NFA.”
In December 2018, a victim of Friedland’s schemes filed a securities suit with a New York court claiming that Friedland and his companies had raised $45 million through an unregistered initial coin offering (ICO) in 2017.
The case was dismissed, however, due to failure to prosecute.