New York man ordered to pay $36 million for cryptocurrency fraud scheme
A federal court in the U.S. has mandated William Koo Ichioka, a resident of New York, to pay over $36 million in restitution and penalties after he was found guilty of orchestrating a fraudulent cryptocurrency and foreign exchange investment scheme. The case was spearheaded by the Commodity Futures Trading Commission (CFTC), which has intensified its regulatory oversight in the cryptocurrency sector.
Judge Vince Chhabria of the U.S. District Court for the Northern District of California imposed a penalty of $31 million in restitution to victims, along with an additional $5 million in civil penalties. The court determined that Ichioka had conducted a deceptive operation from 2018 to 2021, luring investors with unrealistic promises of guaranteed returns of 10% every 30 business days.
Although Ichioka did allocate some investor funds to foreign currency and digital asset trading, a significant portion was diverted to fund his lavish lifestyle, including luxury watches, jewelry, high-end cars, and rent for his residence. This ruling follows a consent order from August 2023 that permanently barred Ichioka from trading in CFTC-regulated markets and prohibited him from future registration with the commission.
In addition to the financial penalties, Ichioka has been sentenced to 48 months in prison, followed by five years of supervised release. His fraudulent scheme is characterized as a classic Ponzi scheme, where new investors' capital was used to pay returns to earlier investors, allowing Ichioka to mislead participants for several years.
Court documents revealed that Ichioka created false financial records and provided fake account statements to investors, falsely suggesting that their investments were yielding positive results. This deception continued until the scheme attracted regulatory scrutiny.
In June 2023, the U.S. Department of Justice (DOJ) charged Ichioka with multiple criminal offenses, including wire fraud, securities fraud, commodities fraud, and filing false tax returns. Ichioka subsequently pled guilty to all charges and received the 48-month prison sentence, along with the financial restitution mandated by the CFTC.
This case highlights ongoing efforts by the CFTC, alongside other regulatory bodies like the Securities and Exchange Commission (SEC) and the DOJ, to crack down on fraudulent activities in the cryptocurrency market. A recent report indicates that U.S. residents lost approximately $5.6 billion to cryptocurrency fraud in 2023, marking a 45% increase from the previous year, with older investors being particularly vulnerable. Data from the Federal Bureau of Investigation (FBI) shows that individuals over 60 accounted for nearly $1.6 billion in losses.
