A federal court has ordered Jafia LLC and its owner, Sam Ikkurty, to pay nearly $84 million to crypto investors after ruling that the firm operated a Ponzi-like scheme.
The judgment, issued by Judge Mary Rowland in the US District Court for the Northern District of Illinois, follows a lawsuit brought by the Commodity Futures Trading Commission (CFTC) in 2022 after the fund’s collapse.
Judge Rowland found that Ikkurty, based in Portland, Oregon, made numerous false claims about his firm’s hedge funds.
These included misleading statements about his trading experience and the promise of high, stable profits. Instead, Ikkurty used funds from new investors to pay earlier investors, a hallmark of a Ponzi scheme.
The Ponzi Scheme
The court discovered that Ikkurty misappropriated investment funds for personal use without investors’ knowledge. These funds were used for personal use and were reported as fraudulent investments, causing significant financial losses to clients.
This non-transparent operation violated CFTC regulations, prompting the hefty fine to compensate defrauded investors and restore some public confidence in the financial system.
Judge Rowland emphasized that fraudulent activities like these only break the law and undermine the integrity of modern financial markets. The $84 million restitution aims to address the financial harm inflicted on investors and reinforce the importance of legal compliance in cryptocurrency trading.