On 26 July 2024, the Commodity Futures Trading Commission (CFTC) announced that Senior Judge David C. Guaderrama of the U.S. District Court for the Western District of Texas entered an order on 9 July 2024, assessing monetary relief totaling over $31 million against Abner Alejandro Tinoco and his company, Kikit & Mess Investments, LLC. The court’s ruling mandates Tinoco and Kikit & Mess to pay, jointly and severally, $6,203,792.18 in restitution to 199 defrauded victims, $6,257,904.89 in disgorgement with credit for restitution payments, and a $18,773,714 civil monetary penalty, which is three times the amount of unlawful gains from their fraudulent forex and cryptocurrency scheme.
This order follows an initial consent decree issued on 25 March 2022, permanently enjoining Tinoco and his firm from future violations of the Commodity Exchange Act (CEA) and CFTC regulations, and banning them from trading in any CFTC-regulated markets. The court found that the defendants engaged in a fraudulent scheme starting in September 2020, where they misappropriated more than $7.2 million of investment funds and paid fictitious “investment profits” to other clients in a Ponzi-like manner. Instead of investing the funds as promised, Tinoco used the money for personal luxuries, including chartering private jets, purchasing a luxury mansion, and acquiring high-end automobiles.
The initial consent order and the monetary relief order resolve the CFTC’s enforcement action filed on 28 September 2021 against Tinoco and Kikit & Mess. The parallel criminal action saw Tinoco charged with five counts of wire fraud on 29 November 2022. He pleaded guilty on 29 February and was sentenced to 84 months in prison, followed by three years of supervised release. He was also ordered to pay $9,023,695.77 in restitution to the victims.
Judicial interpretation and intervention play a crucial role in rectifying legal issues in the financial markets. This case highlights the judiciary’s unprecedented role in upholding market integrity by holding fraudulent actors accountable and by imposing substantial monetary penalties and prison sentences, the court establishes the importance of adhering to regulatory standards and protecting investors from deceptive practices.
The impact of this judgment on the cryptocurrency sphere is significant and widespread. It sends a strong message to market participants about the severe consequences of fraudulent activities. Such judicial actions enhance investor confidence and promote a more secure and transparent trading environment. The ruling also emphasizes the necessity for regulatory compliance and the potential repercussions of failing to adhere to financial laws by way of legal actions, are essential in maintaining its legitimate and trustworthy investment landscape.
The CFTC continues to advise the public on the warning signs of fraud through its Commodity Pool Fraud Advisory and Forex Fraud Advisory. It urges the public to verify the registration status of individuals or companies with the CFTC before committing funds, as a means of safeguarding against potential fraud. Customers and individuals are encouraged to report suspicious activities or violations of commodity trading laws to the Division of Enforcement via a toll-free hotline or online complaint form. Whistleblowers are eligible for a reward of between 10 and 30 percent of the monetary sanctions collected, financed through sanctions paid by violators of the CEA.
(Source: https://www.cftc.gov/PressRoom/PressReleases/8934-24)
