A cryptocurrency investment scheme allegedly raised hundreds of millions of dollars for trading that regulators say never happened, while its CEO spent investor money on mansions, Lamborghinis, Rolls-Royces, a yacht and other luxury goods.
- A cryptocurrency investment scheme allegedly raised hundreds of millions of dollars for trading that regulators say never happened, while its CEO spent investor money on mansions, Lamborghinis, Rolls-Royces, a yacht and other luxury goods.
- The CFTC separately alleges that about $48 million went directly to Delgado and that another $21 million was spent through corporate credit cards.
- The cases put the focus on the same alleged flow of money: investors were told their funds would enter cryptocurrency liquidity pools, while regulators say the money instead moved through the company's operation and into payments, commissions and luxury spending.
The Commodity Futures Trading Commission said Tuesday that Goliath Ventures Inc. and CEO Christopher Alexander Delgado collected at least $397 million from about 1,600 customers. The Securities and Exchange Commission separately alleged that the company raised at least $425 million from more than 1,300 investors.
Delgado pleaded guilty in June to related federal criminal charges and admitted causing at least $250 million in investor losses. The new civil cases detail how regulators say some of the money was diverted.
Regulators Say Promised Crypto Trading Never Happened
Goliath solicited money from investors for cryptocurrency trading and decentralised-exchange liquidity pools, according to the SEC.
The company promised returns of 3% to 10% and represented that investor principal was protected, the agency said.
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→ Submit a Press ReleaseThe SEC alleges that no customer money was placed into the promised liquidity pools.
Instead, funds from new investors were allegedly used to pay earlier investors and create the appearance of profits. The agency also alleges that customers received account statements showing gains that did not exist.
The CFTC made similar allegations. It described Goliath’s operation as a Ponzi scheme and said customer funds were diverted rather than used for the investments advertised.
Investor Money Allegedly Paid For Luxury Assets
The SEC alleges Delgado personally misappropriated at least $51 million.
The CFTC separately alleges that about $48 million went directly to Delgado and that another $21 million was spent through corporate credit cards.
The complaints describe spending on luxury homes, vehicles, travel, jewellery and other personal expenses.
One property identified in the case was an $8.5 million mansion in Isleworth, Florida.
Government filings also identify Lamborghinis, Rolls-Royces, Bentleys, a yacht, Rolex watches, Louis Vuitton goods and Tiffany jewellery among assets linked to the case.
The allegations extend beyond personal purchases. Regulators say company money also paid for private travel, parties, children’s tuition and soccer expenses and other costs unrelated to the investment programme.
The CFTC said roughly $87 million was used for payments resembling returns to earlier investors. It also alleges about $174 million was paid in commissions to recruiters and staff.
Delgado Pleaded Guilty In June
The civil lawsuits follow Delgado’s guilty plea in the federal criminal case.
The Justice Department said Delgado pleaded guilty June 30 to conspiracy to commit wire fraud, wire fraud and money laundering.
Prosecutors said the criminal case involved at least $400 million raised from investors. Delgado admitted causing a minimum of $250 million in losses.
The government is pursuing forfeiture of assets linked to the scheme.
Delgado has agreed to forfeit eight real properties, 11 vehicles, 30 watches, more than 50 luxury bags and wallets and 29 pieces of jewellery, according to the Justice Department.
His sentencing is scheduled for Oct. 21.
Cftc And Sec Use Different Figures
The CFTC’s complaint says at least $397 million came from approximately 1,600 customers.
The SEC’s complaint alleges that more than 1,300 investors supplied at least $425 million.
The Justice Department previously cited at least $400 million in the criminal case.
The figures should not be combined. They come from separate proceedings and reflect different allegations and calculations.
The CFTC is seeking restitution, disgorgement, civil monetary penalties and a permanent injunction. It also wants Delgado and Goliath barred from trading and registration under federal commodities laws.
Sec Alleges Securities Violations
The SEC has also accused Goliath and Delgado of selling investment interests without registration and making false statements about how customer money was being used.
The agency alleges investors were given misleading information about trading activity, profits and the location of their funds.
Delgado has agreed to a bifurcated settlement with the SEC, subject to court approval, according to the agency.
The SEC is seeking financial remedies and permanent injunctions.
Investors Face A Long Recovery Process
A receiver was appointed earlier in the case, and a bankruptcy proceeding is under way.
The recovery process will determine how much money can ultimately be returned to investors.
Delgado’s guilty plea means his criminal case is no longer simply an allegation as to the offences to which he admitted. The CFTC and SEC cases are separate civil proceedings, and their allegations remain subject to court proceedings.
The cases put the focus on the same alleged flow of money: investors were told their funds would enter cryptocurrency liquidity pools, while regulators say the money instead moved through the company’s operation and into payments, commissions and luxury spending.
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