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According to a press release released Wednesday by the Federal Trade Commission (FTC), the agency will send over $ 470,000 in payments to people who have lost money in deceptive chain referral schemes involving cryptocurrencies. The FTC complaint alleged that three defendants, Thomas Dluca, Louis Gatto, and Eric Pinkston, were promoting illegal schemes known as Bitcoin Funding Team and My7Network. They reportedly did so via websites, YouTube videos, social media, and conference calls.
The FTC said the defendants’ plans promised large returns for small payments in cryptocurrency, bitcoin, or Litecoin. To attract attendees, defendants said their platform could turn a payment of just over $ 100 into $ 80,000 in monthly income. However, scheme participants could only generate revenue by recruiting new participants and convincing them to send cryptocurrency payments as well.
For example, the FTC explained, Bitcoin Funding Team worked by requiring participants to make an initial bitcoin payment to a previous participant and in addition to a fee. After the initial investment, participants could recruit new members and receive payments from those new members. The Bitcoin Funding Team reportedly said attendees could earn higher rewards if they forked more money.
According to the FTC, however, few participants have recovered their investments. In March, the FTC asked a federal court to terminate the schemes after gathering evidence that the schemes were designed and enriched those at the top at the expense of everyone else, in violation of the FTC law. The court agreed to do so and halted the scam artists’ encrypted money making plans.
At the request of the FTC, the court issued a temporary restraining order and froze the defendants’ assets pending trial. Now, and as part of the deal, the FTC will be sending 7,964 refunds via PayPal starting November 5th. The average payback is around $ 59, the press release states.
