Control Finance Scams Flagged for Conducting Hazardous Activities
One of the largest Bitcoin Ponzi scams to date was created by Benjamin Reynolds. The U.S. The Commodity Futures Trading Commission (CFTC) has issued a default judgment against the man even though he hasn’t yet been found.
After a federal New York judge rendered the default judgment against him, he would be required to pay a fee of $572 million in restitution and penalty. The victims of the pyramid scheme were defrauded. A pyramid scheme is a shaky and unstable business model that con artists try to entice participants with promises of great returns quickly. The process begins with a small number of the original, top-level participants or members recruiting new participants who pay them up-front costs and fees to participate in the business. These new members then bring in additional fresh blood. They are paid fees by the participants at the next level.
The initial members do receive a percentage of these additional fees, though. Until there is no one left to add, fees are collected, paid, and funneled up the pyramid’s various levels. A pyramid scheme ends at that stage due to a lack of funding. Most participants suffer financial losses.
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What is a Cryptocurrency Scam?
Scams always follow when money is involved. The same applies to cryptocurrencies. Wormhole, a cryptocurrency exchange platform, suffered a $320 million loss as a result of a cyberattack in February 2022. In addition to this attack, a report by the Federal Trade Commission claims that cryptocurrency scammers have taken more than $1 billion since 2021.
Digital currency is a type of money that is kept in a digital wallet and may be converted into actual cash by the owner by transferring it to a bank account. Digital currency is different from cryptocurrencies like bitcoin. Since it runs outside of financial institutions and uses blockchain for verification, it is more difficult to recoup from theft.
Even if bitcoin is a more recent trend, crooks are still stealing via traditional means. Ponzi schemes pay their older investors out of the earnings of new investors. Bitcoin will be used by cryptocurrency crooks to entice new investors. Since there are no reliable investments, the strategy is a money-making scheme that goes in circles.
The promise of enormous riches with little risk is the core allure of a Ponzi scheme. However, there are always dangers associated with these investments, and no profits can be guaranteed.
Control Finance Makes No Mention of The Company's Owners or Managers
On its website, Control Finance makes no mention of the company’s owners or managers. The Control Finance website provides U.K. Companies House incorporation paperwork, which lists a September 8th, 2016, incorporation date.
Bruntwood, which offers virtual office space for rent, is the company whose corporate address Control Finance has provided. As a result, it appears that Control Finance only exists in name in the U.K.
Benjamin Reynolds is the only Director of the business and the listed owner of the domain for the Control Finance website (registered September 6th, 2016). The speaker in the promotional movies for Control Finance on the corporate website has a pronounced Eastern European accent. The speaker reads promotional material from the Control Finance website in the videos.
Although he doesn’t identify himself, the individual is most likely not Benjamin Reynolds. It is very clear that neither Control Finance nor Benjamin Reynolds is physically present in the U.K. Always consider joining and/or giving any money to an MLM firm very carefully if it is not transparent about who owns or runs it. Affiliates can only promote Control Finance affiliate membership; the company offers no retail-able goods or services.
According to investigators, Reynolds first ran Control-Finance like a Ponzi scheme, repaying previous investors with funds he raised from new ones. The model, however, proved unsustainable as the number of new clients decreased, leading Reynolds to close his business and disappear with the money from his investors, according to officials.
The purported Bitcoin trading and investment firm Control-Finance Limited (Control-Finance) and its principal, Benjamin Reynolds (collectively, defendants), both of whom are from the United Kingdom, have been named defendants in a civil enforcement action (Complaint) filed by the Commodity Futures Trading Commission (CFTC) in New York.
According to the complaint, the defendants obtained at least 22,858.822 Bitcoin—worth at least $147 million at the time—by defrauding and misappropriating them from more than 1,000 clients.
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Defendants’ Fraudulent Solicitations and Fabricated Trade Reports
According to the filing, the defendants allegedly engaged in fraudulent Bitcoin solicitation using a website and profiles on well-known social media platforms from at least May 1st through October 31st, 2017.
By falsely advertising that they hired experienced cryptocurrency traders who achieved guaranteed daily trading gains on all Bitcoin deposits, the defendants persuaded clients to transfer Bitcoin to them.
The defendants made a number of important false statements and omissions, including that they (1) generated daily trading profits of up to 1.5 percent for customers and up to 45 percent monthly; (2) used risk diversification strategies to safeguard customers’ Bitcoin deposits; and (3) offered a “safe haven” from risks associated with the Bitcoin market. In reality, the defendants misappropriated the customers’ Bitcoin deposits and did not execute any trades on their behalf, earning no trading gains for them.
By giving customers fake account balances and profit numbers that erroneously showed trading profits that did not exist, the defendants covered up their crime. Additionally, they falsified weekly Trade Reports that listed fictitious, ostensibly profitable trades in virtual currencies that the Defendants never executed.
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The Fraudulent “Affiliate Program” Pyramid Scheme
The defendants used a complex pyramid scheme they dubbed the Control-Finance “Affiliate Program” to sell and hide their crime.
Through the Affiliate Program, the Defendants falsely promised to pay “Affiliates,” or anyone who referred new customers to the Defendants, increasing referral income, incentives, and bonuses in the form of Bitcoin.
Affiliates in the Affiliate Program might share public referral hyperlinks on social media sites and send them to their friends and family. The Control-Finance website was the destination for new consumers who wanted to deposit Bitcoin with the defendants after clicking on a referral link. The defendants subsequently transferred a small amount of Bitcoin to the affiliate link to the hyperlink’s Control-Finance account. Like all client accounts, the accounts of Affiliates really showed fictitious amounts that weren’t backed up by genuine Bitcoin.
Misappropriation and Confusing Blockchain Transactions
The complaint states that the defendants illegally diverted customer bitcoin deposits to pay customers who requested account withdrawals in a manner akin to a Ponzi scheme.
The defendants did this in two ways: (1) by carrying out inefficient and perplexing blockchain transactions to move customers’ bitcoin into other wallet addresses under the Defendants’ control.
The defendants’ misappropriation scheme depended on making special, one-time-use wallet addresses to accept Bitcoin deposits from clients. Customers who put Bitcoin into the one-time addresses were then forwarded to other pooled wallet addresses that the defendants set up at virtual currency exchanges and payment processors across North America, Europe, and Asia. According to the complaint, the defendants transferred clients’ Bitcoin into these pooled wallet addresses through transactions that had no real business justification and were made only to cover up the theft.
The CFTC is pursuing a number of remedies in its ongoing legal action, including civil monetary penalties, restitution, rescission, disgorgement of unjust gains, trading and registration restrictions, and permanent injunctions against future violations of the federal commodity laws.
The Control Finance Ponzi Plan
Affiliates of Control Finance make investments with the expectation of a constant daily ROI of 1% to 1.4 %:
- Beginner (invest $10 to $299): Get 1% interest per day.
- Intermediate (invest $300 to $999): Get 1.15% interest per day.
- Advanced (invest $1000 to $4499): Get 1.250% interest per day.
- Master (invest $4500 to $9999): Get 1.40% interest per day.
- Master+ (invest $10,000 or more): Get 1.50% interest per day.
Control Finance uses a uni-level compensation structure to pay referral commissions.
An affiliate is put at the head of a unilevel team in a unilevel pay system, and each affiliate they personally recruited is positioned immediately under them (level 1):
New affiliates brought on by any level 1 affiliates are added to the original affiliate’s unilevel team at level 2. If any level 2 affiliates bring on new affiliates, they are promoted to level 3, and so on down a theoretically endless number of levels.
Payable uni-level levels are limited by Control Finance to seven. The following commissions are given as a proportion of the money invested at each of these five levels:
- Beginner: 5% on level 1 (personally recruited affiliates), 5% on level 2, 3% on level 3, 1% on levels 4 through 6, and 0.5 % on level 7.
- Intermediate: 10% on level 1, 5% on level 2, 3% on level 3, 1% on levels 4 through 6, and 0.5 percent on level 7.
- Advanced – 15% on levels 1, 5, 3, and 2, 3% on levels 3, and 1% on levels 4 through 6 and 0.5 percent on level 7.
- Master: 20% on level 1, 5% on level 2, 3% on level 3, 1% on levels 4 through 6, and 0.5 percent on level 7.
- Master+ – 25% on levels 1, 5, 3, and 2, 3% on levels 3, and 1% on levels 4 through 6 and 0.5 percent on levels 7.
Joining Control Finance
Control Finance affiliates who don’t invest can only earn referral commissions. Full participation in the Control Finance income opportunities requires a minimum investment of $10.
Usual Tactics Involved
To entice their unwary investors, Control-Finance used the standard promises of daily returns. A 45 percent monthly return and 1.5 percent every day were promised.
Control Finance faked weekly trade reports, as is typical in similar scams, to provide investors with even more bogus information. The organization made the customary annual return claims to new investors, but the whole thing was really just a giant Ponzi fraud. The CFTC clarified that Reynolds’ major commitment was to repay all Bitcoin deposits to the various Control-Finance customers by the end of October 2017.
As we all now know, he didn’t do that; instead, he kept the deposits for his own use. Due to this plan, the majority of the consumers managed to lose all of their Bitcoin deposits, with just a small minority managing to recover even a small portion of their initial investment.
The U.K. incorporation of Control Finance is the first warning sign. The cost of incorporating in the U.K. was less than £20 GBP, and there is no verification of the information provided.
Control Finance is unquestionably an investment potential, even if we accept the Companies House incorporation at face value. Investment possibilities cannot be offered by U.K. firms without Financial Conduct Authority registration. Control Finance or any derivatives are not found on the FCA’s list of registered firms.
Benjamin Reynolds is your second cause for concern. Unspecific Anglo-Saxon name with a virtual office address as the only way to get in touch. How Control Finance claims to fund its daily ROI payouts is your third cause for concern.
Naturally, no evidence of cryptocurrency trade is offered. Even so, the cryptocurrency trading business model defies the logic of the Ponzi scheme. Why would Ben Reynolds and his European friends be looking for investment from strangers online if they could produce a least 1.5 percent daily ROI? Affiliate investment is now the only verified source of source entering Control Finance. Control Finance is a Ponzi scheme because it uses them to pay a constant daily ROI.
Two months ago, promotional videos were uploaded to a false Benjamin Reynolds YouTube account. The reserve funds will run out after 67 days if the rate is 1.5 percent each day. Less after taking into account referral commissions and a little bit longer assuming that not every Control Finance affiliate will invest $10,000 or more. No matter when it occurs, all Ponzi schemes eventually fail. Ponzi math ensures that most investors will lose money in Control Finance; thus, it is not an exception.
If you participated in such a Ponzi scheme, the claimers are the only company you can rely on to reclaim your funds.
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