Guarantees and Investing: Tales of a Crypto Trader
The SEC has an office of investor relations which continually educates and warns investors. The Office educates people about investing. It warns them about scams. Other federal agencies have offices which perform similar functions.
Yet day after day people entrust their investment capital to those who are only too anxious to take it and never return the investment funds. Day after day there are stories of people putting their money into what turns out to be an offering fraud because it was run by a friend, a relative, or someone else who had a reference that bolstered their credentials.
While the type of scams people are lured and tricked into are endless, one over-riding point should always be clear: All investments have risk; if there is no risk there is no investment. Stated differently, if the promoter, or whoever is connected with it guarantees against loss – or uses some other grouping of words that equal that idea – it is a fraud. Time to grab your money and run.
Consider the following case: Jon Thompson is the principal of Volantis Market Making LLC. Mr. Thompson and his firm introduce investors to crypto currency through transactions which are guaranteed against risk; guaranteed against lost. The transactions were simple. Company A decides in June 2018 to invest in bitcoin but has no experience. On the other side of this transaction is supposed to be a counter-party that wants to invest bitcoin in U.S. currency.
Volantis and Jon are the perfect parties to contact. They step forward and agree with Company A to hold the U.S. currency until the buyer arrives. Then an exchange will take place. Everyone is guaranteed; everyone is safe and secure.
After Company A furnishes Mr. Thompson and Volantis with the U.S. currency, the bitcoin does not arrive however. Excuses are offered for the delay. Records are produced assuring everyone about the transaction. No bitcoin; no counter-party. No money.
A short time later – July 2018 – Company B wants to invest U.S. dollars in bitcoin but has no experience. Jon and Volantis step forward and agree to hold the cash pending the exchange. There is a guarantee against loss. The cycle with Company A repeats. Jon is charged in a criminal complaint with conspiracy, commodity fraud and wire fraud. U.S. v. Thompson (E.D.N.Y. Filed July 25, 2019). The investor cash is gone. The case is pending.