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Bitcoin scam used claims of ‘trading robots’ to fleece victims

By Daniel Tyson

17:40, 13 August 2021

Bitcoin on a mouse trap
Bitcoin on a mouse trap - Photo: Shutterstock

Three men have been ordered to pay $1.75m for their involvement in a bitcoin scam that used YouTube videos and claims of “cutting edge trading robots” to target minority communities in the US.

A federal judge in Houston entered a consent order for Mayco Alexis Maldonado Garcia and a separate civil consent order involving brothers Cesar Castaneda and Joel Castaneda Garcia. The consent orders specify the accused parties admit to allegations brought against them in a civil action by the US Commodity Futures Trading Commission against Global Trading Club (GTC).

Under the nearly identical orders, the three men are permanently banned from trading commodities. Additionally, they are required to pay nearly $1m in restitution to their victims.

Maldonado must also pay a penalty of $400,000, while Castaneda and Garcia must pay penalties of $180,000 each. The complaints state that at least 27 customers deposited a total just shy of $1m to invest in a bitcoin trading with GTC.

Calls to the lawyers representing the GTC scammers this week went unreturned. Capital.com was unable to locate the men in Florida or Texas, the locations specified in the consent orders.

Business made many false claims

The consent orders say GTC promoted its business using numerous channels, including a website, the GTC Digital smartphone app, videos posted to their YouTube channel and a Global Trading Club Facebook account.

Between August 2016 and October 2027, according to the order, the three men falsely represented to potential customers that their business, Global Trading Club hired “master traders” with years of experience in the cryptocurrency industry.

US100

20,800.30 Price
+0.440% 1D Chg, %
Long position overnight fee -0.0241%
Short position overnight fee 0.0019%
Overnight fee time 22:00 (UTC)
Spread 7.0

BTC/USD

98,503.95 Price
-1.090% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

Gold

2,716.45 Price
+1.740% 1D Chg, %
Long position overnight fee -0.0174%
Short position overnight fee 0.0092%
Overnight fee time 22:00 (UTC)
Spread 0.60

ETH/USD

3,434.16 Price
+3.430% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 6.00

Phoney trading robot used in scam

The orders say GTC claimed to use “cutting edge trading robots” to trade bitcoin for GTC’s customers “24 hours a day, 7 days a week.” The men hosted GTC seminars in California, Hawaii and Texas to attract investors, the orders say.

According to the court documents, the three men marketed GTC services to non-English speakers in the US, mainly in Latino and Korean communities. The company created YouTube videos in Spanish and Korean to lure customers to invest in cryptocurrency using GTC, according to the 18-page complaints.

GTC’s marketing materials offered additional earnings through a multi-level marketing structure, where customers could earn additional money by recommending new customers to GTC, the documents say. Customers could also purchase GTC memberships from as low as $250 up to $31,000, the complaints read.

GTC didn’t pay out promised bonuses

Promises of cash bonuses for each direct referral, upwards of 20% of the deposit made by the new customers were used to attract new members. Customers were offered bonuses for indirect referrals and a "matching bonus" for multi-level marketing groups. The amount of the bonuses increased if customers made additional deposits with GTC, which placed them at a higher membership level within GTC, the orders read.

To conceal their fraud, the defendants caused misleading trading statements to be posted online, the documents say.

Repeated calls from Capital.com to the men’s lawyers and the US Commodity Futures Trading Commission went unreturned over three days.

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