- Illinois judge rules in favor of CFTC in crypto Ponzi case involving altcoins.
- Sam Ikkurty defrauded investors with promises of 15% annual returns from digital asset commodities.
- Court orders Ikkurty to pay over $120 million in restitution and disgorgement.
An Illinois district court judge has ruled in favor of the United States Commodity Futures Trading Commission (CFTC) in a case involving a cryptocurrency Ponzi scheme. The ruling, made by Judge Mary Rowland, has classified two lesser-known altcoins, KlimaDAO (KLIMA) and Olympus (OHM), as commodities. The scheme, orchestrated by Sam Ikkurty from Oregon, involved several of his companies. Ikkurty deceived investors by promising steady annual returns of 15% from investments in “digital asset commodities,” including Bitcoin, Ether, KLIMA, and OHM.
Financial and Legal Consequences
In a statement released on July 3, the CFTC detailed how Ikkurty misled participants by claiming investments in stable crypto assets and overstating his past successes. Instead of generating profits, Ikkurty operated what the CFTC described as a Ponzi scheme, misrepresenting the fund’s performance and failing to disclose that its value had dropped by over 98.99% within months. He also transferred significant funds to early investors to hide losses, resulting in a $20 million shortfall for participants in the supposed carbon offset program.
Judge Rowland ordered Ikkurty to pay more than $83.7 million in restitution and $36.9 million in disgorgement. Additionally, the CFTC noted that Ikkurty previously lost all his personal Bitcoin holdings due to a hack.
Broader Implications
The CFTC initially accused Ikkurty and his associate, Ravishankar Avadhanam, of fraud and failure to register with the agency in May 2022. The pair solicited over $44 million from at least 170 people through a website, YouTube videos, and other methods, promising to trade cryptocurrencies, derivatives, and commodity futures contracts.
