New York Man Fined $36 Million in Cryptocurrency Fraud Case

The court's decision underscores the growing regulatory crackdown on fraudulent schemes in the cryptocurrency market.

A federal court has fined William Koo Ichioka, a New York resident, $36 million for orchestrating a cryptocurrency and foreign exchange fraud scheme that deceived investors with promises of high returns and misused their funds for personal luxuries.

The U.S. Commodity Futures Trading Commission (CFTC), which brought the case, revealed that Ichioka’s scheme began in 2018. Investors were lured in with claims of “10% returns every 30 business days,” an unrealistic promise that often signals potential fraud in investment circles.

While Ichioka did invest some of the funds into foreign currencies and cryptocurrencies as pledged, court documents reveal that he diverted a substantial portion for personal expenses, including rent, luxury vehicles, watches, and jewelry. U.S. District Court Judge Vince Chhabria, who presided over the case, ordered Ichioka to pay $31 million in restitution to the victims of his fraud. This compensation aims to reimburse those who suffered financial losses. Additionally, Ichioka was slapped with a $5 million civil monetary penalty.

This ruling follows a permanent injunction issued against Ichioka in August 2023, which banned him from trading in markets regulated by the CFTC and prohibited him from future registration with the commission. The ruling aims to prevent Ichioka from engaging in similar fraudulent activities going forward.

The CFTC's action against Ichioka is part of an increasing wave of regulatory scrutiny targeting fraudulent schemes in the cryptocurrency space. In May 2024, the U.S. Department of Justice charged crypto personality Thomas John Sfraga with wire fraud for promising investors returns as high as 60% within three months. Similarly, the SEC charged crypto trading course instructor Brian Sewell in February for misleading his students with promises of lucrative hedge fund returns.

These cases underscore the growing regulatory focus on combating fraud in the crypto space. A recent CFTC report indicated that U.S. investors lost $5.6 billion to cryptocurrency fraud in 2023, representing a 45% increase over the previous year. Particularly concerning is that older investors, especially those over 60, accounted for nearly $1.6 billion of those losses, highlighting their vulnerability to scams.

As the cryptocurrency market continues to expand, this case serves as a reminder for investors to exercise caution, particularly with schemes promising unusually high or guaranteed returns.

photo source / Blockonome