Crypto fund manager gets indicted for alleged fraud

A crypto fund manager from New York, Iterative Capital Management (ICM), has been brought to trial by the Washington-based software firm, KDH Consulting Group, for allegedly misappropriating with investors’ funds and deceiving investors, said the official complaint file dated 27th April 2020.

Iterative Capital’s co-founder Christopher Dannen had come up with a unique idea back in 2017 to offer enthusiastic cryptocurrency investors a new channel to explore the expanding digital currency market. Soon, it started attracting new customers across the US.

To the tech consulting firm KDH Consulting Group the idea of a highly liquid crypto fund with an option of quarterly withdrawals, solely focussing on cryptocurrency trading, which seemed lucrative at the time, sounded exciting. 

Crypto fund manager finally brought to trial

Unfortunately, like so many other conspicuous cryptocurrency scams such as OneCoin, this too was too good to be true. On Monday, KDH launched a lawsuit against ICM for purportedly committing fraud and non-compliance with fiduciary duties. 

According to the complainant, ICM wrongfully invested the funds and treated them as their own by spending the money on cryptocurrency mining operations and over-the-counter trading on exchanges. All of this and much more was carried out after lying to its investors about a previously managed crypto fund.

The complaint states that ICM’s extravagant claims at the time seemed like a promising offer to KDH, which is why it decided to contribute around $1 million, making it a limited partner of ICM. Little did they know that ICM had some ulterior motives on how to go about using these funds.

Duped investors with made-up success stories

Reportedly, what the defendant had not disclosed to KDH was the fact that it had, in fact, paid back the funds from previous investment given diminishing interest in cryptocurrency trading. Rather, they chose to publicize their past success stories to gain new customers.

When things started to go downhill for Bitcoin in January 2018, when it plummeted to lowest-ever figures, the complainant requested a payback however was met with several requests to retain the investment. 

After having made several unsuccessful attempts at requesting a payout, KDH finally issued a deadline to hand over the funds. Needless to add, ICM missed it and is now in the midst of a lawsuit.

The plaintiff now seeks compensatory and punitive damages and demands a ruling that prohibits the defendant from engaging in any activity that causes further damage to its finances. 

Meanwhile, it’s no surprise that cryptocurrency scams and Ponzi schemes have become much more prevalent at a time when investors are seeking safe haven options amid uncertain times. Thus, it is incredibly vital that one considers the eventuality of losing all the investments if not made with the right kind of plan.