Greg Kilminster
Head of Product - Content
US Federal Court fines Sam Ikkurty $209 million for operating a Ponzi scheme
The Commodity Futures Trading Commission (CFTC) has announced the final Federal Court judgment against Sam Ikkurty and several entities for operating a commodity pool Ponzi scheme. The judgement, which comes after a summary order issued in July 2024, imposes fines amounting to $209,614,892.
The Court determined that Ikkurty and his entities deceived investors by misrepresenting their “crypto hedge funds” and the promised profits. Instead of delivering the profits, they ran a scheme similar to a Ponzi scheme. Additionally, the defendants were found to have misappropriated funds through a carbon offset program and failed to register with the CFTC as commodity pool operators.
Notably, during the legal proceedings, digital assets worth over $18 million, which had been recovered from Ikkurty and held by a court-appointed receiver for compensating victims, were stolen in a cyber attack. The court held Ikkurty in contempt for stealing and refusing to return these assets. However, the CFTC successfully located the assets and ensured their return to the receiver in compliance with the court’s order.
As part of the final judgment, the defendants are required to pay restitution amounting to $83,757,249, disgorge unlawful gains totalling $36,967,285, and pay a civil monetary penalty of $110,901,855. Additionally, Ikkurty must pay an outstanding contempt fine of $14,071,000 and $884,788 in professional expenses advanced from the Receivership Estate to fund his defence.
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Surge in Bitcoin ATM fraud raises alarm
Bitcoin ATMs, once touted as a convenient means for buying or transferring cryptocurrency, have increasingly become a tool for scammers, according to recent data from the US Federal Trade Commission (FTC). Losses attributed to fraud involving Bitcoin ATMs (BTMs) have soared, rising nearly tenfold between 2020 and 2023. In the first half of 2024 alone, reported losses exceeded $65 million—a figure that likely represents only a fraction of the actual damage, as many incidents go unreported.
A growing threat
The increasing prevalence of BTMs in everyday locations, such as convenience stores and petrol stations, has coincided with a significant rise in cryptocurrency-related scams. Initially, cryptocurrency scams were predominantly linked to fake investment schemes. However, scammers have diversified their tactics, now exploiting BTMs in a variety of fraudulent activities, including government impersonation, business impersonation, and tech support scams.
The reports suggest that older adults are particularly vulnerable, with those aged 60 and above being more than three times as likely to report losses involving BTMs compared to younger individuals. In fact, two-thirds of all BTM-related fraud losses reported in the first half of 2024 were incurred by older adults. The median loss for these scams stood at $10,000, highlighting the significant financial impact on victims.
The anatomy of a BTM scam
Scammers often initiate contact through unsolicited phone calls, messages, or computer pop-ups, claiming suspicious activity on an account or impersonating a well-known company like Microsoft or Apple. The scam then escalates, with the fraudster insisting that the victim’s money or personal information is at risk, sometimes even roping in fake government agents to intensify the pressure.
Victims are then directed to withdraw cash and deposit it into a Bitcoin ATM, with scammers even referring to these machines as "safety lockers." The fraudster provides a QR code to be scanned at the machine, which transfers the funds directly into the scammer’s digital wallet. Once the transaction is complete, the money is virtually impossible to recover.
To avoid falling victim to such scams, the FTC advises individuals to be wary of unexpected calls, messages, or pop-ups that demand immediate action. Verifying the legitimacy of such communications by independently contacting the purported company or agency is crucial. The FTC also emphasises the importance of never withdrawing cash or using a Bitcoin ATM in response to an unsolicited request, as legitimate businesses and government agencies will never make such demands.
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CMA issues warning letter to Starling Bank over survey data breach
The Competition and Markets Authority (CMA) has issued a letter to Starling Bank regarding their non-compliance with Part 3 of the Retail Banking Market Investigation Order 2017 (Order).
Under Part 3 of the Order, all Business Current Account (BCA) providers with 20,000 or more SME customers in Great Britain must participate in a survey to assess how likely their customers are to recommend their services. Providers must share specific data with the appointed market research company to complete the survey. Unfortunately, Starling Bank failed to provide the company with the necessary data, attributing the breach to a misunderstanding of the requirements.
Next steps
The CMA has decided not to take further formal enforcement action at this time and will actively monitor the survey results to assess whether additional measures need to be taken.
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FMA Chief outlines regulatory approach
The regulatory balance
In a speech to the Financial Services Council (FSC) 2024 Conference, Samantha Barrass, Chief Executive of New Zealand’s Financial Markets Authority (FMA) highlighted the challenge facing New Zealand’s financial services sector: that of maintaining consumer resilience while fostering long-term prosperity.
With the FMA soon to assume responsibility for the Credit Contracts and Consumer Finance Act (CCCFA), Barrass noted that the FMA’s oversight will span a wide array of financial products integral to New Zealanders' lives, from loans to retirement investments.
Reflecting on her own regulatory philosophy, Barrass recounted her scepticism towards over-regulation, shaped during the economic liberalisation of the 1980s. She argued that regulation should be necessary, justified, and aimed at enabling growth rather than stifling it. The FMA’s approach, she stated, is to avoid unnecessary regulatory burdens while ensuring strong protections for consumers and investors.
FMA’s approach to regulation
Barrass underscored that the FMA is committed to regulation that genuinely matters and passes the “so what” test. The regulator’s focus is on achieving outcomes that protect consumers without imposing excessive costs on firms. She cited the FMA’s consideration of a class exemption for green, social, and sustainability-linked bonds as an example of how the regulator is willing to adapt in response to fair and well-argued cases from the industry.
Guidance, explained Barass, is a key tool for the FMA. She pointed to recent guidance on liquidity risk management, clarifying that it is designed to equip firms with the systems and controls needed to manage liquidity risks effectively. The FMA expects senior leaders to engage with such guidance strategically, avoiding mere box-ticking and ensuring that firms meet regulatory expectations in a meaningful way.
Emphasising outcomes-focused regulation
Barrass reiterated the FMA’s commitment to an outcomes-focused regulatory approach, where the goal is not just compliance but achieving meaningful results that protect consumers and ensure market integrity. This approach, she clarified, is not about introducing new rules but refining how the regulator operates to remain effective and forward-looking.
Feedback from the industry, particularly from the FSC, has prompted the FMA to pause and reassess its implementation strategy. Barrass reassured attendees that the FMA’s intention is to balance effective regulation with fostering innovation, ensuring the financial services sector can thrive without being unduly constrained by regulation.
Enforcement and prevention
Barrass acknowledged recent enforcement actions, noting that while enforcement is critical, it is often a last resort. The FMA’s primary focus, she said, is on prevention through proactive supervision. By building strong relationships with firms, the FMA aims to prevent harm before it occurs, aligning with its goal of being an engagement-led regulator.
She emphasised the importance of these relationships, noting that they benefit both the regulator and the industry. A well-resourced FMA with experienced staff can provide meaningful support to firms, helping them navigate regulatory requirements while maintaining high standards of consumer protection.
Financial services reforms
Looking ahead, Barrass discussed the imminent transfer of credit functions from the Commerce Commission to the FMA and the implementation of the new Conduct of Financial Institutions (CoFI) regime. The FMA, she said, is working closely with the Commerce Commission to ensure a seamless transition and is actively engaging with firms to support their preparations for the new regulatory environment.
Barrass also acknowledged Minister Bayly’s priority of streamlining capital market settings to facilitate greater access to capital, particularly in private assets. The FMA, she assured, is committed to working with the government and industry to explore how it can support these markets while maintaining its focus on consumer protection and market integrity.
Regulation as an enabler
Concluding her speech, Barrass highlighted the FMA’s role in ensuring that regulation acts as an enabler of well-functioning markets, rather than a barrier to economic growth. She recognised the inherent tension between fostering competition, ensuring financial stability, and protecting consumers—a tension that underpins the importance of the FMA’s work and the role of the Council of Financial Regulators.
The FMA, Barrass said, will be responsive to the findings of the Commerce Commission’s recent report on mortgage advice transparency and is prepared to work with the industry to address concerns in this area. As the CoFI regime takes effect, the FMA will continue to use its supervisory engagement to address issues raised in the report and ensure that the financial services sector remains fair, transparent, and trustworthy.
Barrass closed by reiterating the FMA’s commitment to fairness, which she described as central to its mission. Recent FMA research has shown that New Zealanders broadly agree on what constitutes fairness in financial services, a finding that will inform the regulator’s ongoing efforts to engage with the industry and improve outcomes for all stakeholders.
The FMA’s vision is to build a financial services sector that not only supports the financial wellbeing of New Zealanders but also earns their trust and confidence. Achieving this vision, she asserted, will require close collaboration between the FMA, the industry, and other stakeholders, as they work together to foster a vibrant, resilient, and prosperous financial sector.
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