Cryptocurrency hedge fund Jafia LLC ordered to pay $84 million for Ponzi scheme

According to the latest news, a federal court in Illinois, USA, has ordered cryptocurrency hedge fund Jafia LLC and its owner Sam Ikkurty to pay $84 million.
The verdict follows a 2022 fraud charge brought by the U.S. Commodity Futures Trading Commission (CFTC) against Sam Ikkurty of Portland, Oregon, Ravishankar Avadhanam of Aurora, Illinois, and Jafia LLC, a company owned by Ikkurty in Florida. .
Judge Mary Rowland said in her ruling that Sam Ikkurty made various misrepresentations about his company Jafia’s cryptocurrency hedge fund business, including about his experience in cryptocurrency trading.

Jafia LLC Fraud Details

Sam Ikkurty, Ravishankar Avadhanam and Jafia LLC fraudulently solicited at least $44 million in participating interests in purported income funds invested in digital assets.
The indictment states that the defendants used the website and YouTube videos to "solicit more than $44 million from at least 170 participants to purchase, hold and trade digital assets, commodities, derivatives, swaps and commodity futures contracts." The defendants also allege The defendants operated illegal commodity pools and were not registered as commodity pool operators.
Instead of investing funds to generate passive income through staking or well-managed transactions, the defendants allegedly simply redistributed funds to other users in a manner similar to a Ponzi scheme. The defendants also transferred millions of dollars to an offshore entity, which in turn may have transferred funds to foreign cryptocurrency exchanges, totaling $18 million.

Additionally, the indictment charges three funds owned and operated by the defendants, namely the Rose City Income Fund, Rose City Income Fund II LP (Rose City) and Seneca Ventures LLC, as relief defendants in possession of funds in which they have no legal interest.

On May 11, 2022, the Honorable U.S. District Court Judge Mary Rowland entered an ex parte statutory restraining order freezing assets controlled by the defendants, preserving records, and appointing a temporary receiver.
In pursuing the case, the CFTC seeks compensation for defrauded investors, disgorgement of ill-gotten gains, civil penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.