The Commodity Futures Trading Commission (CFTC) has charged a self-claimed Florida financial adviser and his company with fraud for allegedly duping investors in his algorithmically charged “Compcoin” token out of $1.6 million.
Alan Friedland and his company “Fintech Investment Group, Inc.” allegedly marketed Compcoin as the key to a proprietary foreign exchange trading software, ART. This algorithm was said to predict dollar-to-euro forex trades with pinpoint accuracy and yield high returns, the complaint said. Cryptocurrency gave investors access and hundreds of investors jumped in.
“In eight years of controlled lab testing, Compcoin delivered an average 10% quarterly return on investment (ROI) – much higher than the ROI of most retail and institutional forex traders,” promised the white paper.
The scheme successfully brought in $1.6 million, the CFTC claimed, and even managed to get Compcoin listed – temporarily – on digital asset exchanges during its sale from 2016 through 2018. Success was short lived.
As alleged by the CFTC, none of the investors got what they paid for. According to the complaint, the man and the company that they paid were not approved to market access to a forex algorithm at all. The National Futures Association (NFA) never approved Fintech’s Compcoin disclosure statements, according to the complaint.
Additionally, on April 2 the NFA issued a complaint against Friedland and his company for “failure to cooperate” in NFA’s investigation of Compcoin.
“Instead of gaining access to ART’s high success rate at predicting USD/EUR forex trades and high rate of return from the trades as promised, purchasers of Compcoin were left with a valueless asset,” the CFTC complaint alleges.
“The CFTC remains committed to protecting market participants from fraudulent schemes, including novel forms of fraud like the one alleged here, where defendants allegedly solicited customers to purchase a digital asset in order to gain access to Fintech’s purported forex trading algorithm,” CFTC Director of Enforcement James McDonald said in a press release.
Read the full complaint below:
CORRECTION (April 16, 22:10 UTC): A previous version of this story incorrectly reported that Fintech Investment Group had never been approved by the NFA.