FTC shuts 3 cryptocurrency firms

The Federal Trade Commission on Friday said it won a federal court order in Miami to shut down three cryptocurrency businesses operating in South Florida and elsewhere around the United States.

The agency said it obtained the order to stop alleged deceptive practices by web-based companies called Bitcoin Funding Team, My7Network and Jetcoin. Four individuals — one of whom is a South Florida area resident — are named as defendants in a civil complaint filed by the agency under seal last month.

The case was unsealed Friday as the FTC announced its action. It described all three operations as “deceptive cryptocurrency schemes” that falsely promised customers they would earn large returns by paying Bitcoin or Litecoin to enroll.

The agency alleged that Thomas Dluca, Louis Gatto and Eric Pinkston used YouTube videos, social media and conference calls to persuade customers that the Bitcoin Funding Team and My7Network could convert the cryptocurrency equivalent of $100 into $80,000 in monthly income. But the FTC said the only way participants could generate revenue was by recruiting others to join.

“In reality, Bitcoin Funding Team’s structure, which created a continual chain of recruitment and recruitment-related payments, ensured that few participants would obtain the results depicted or projected by [the] defendants,” the agency said in its complaint. “In fact, once the recruitment base reached a certain level, the majority of the participants at any given moment in time would have failed to recoup their initial investments.”

A fourth defendant, Scott Chandler, is alleged to have promoted Bitcoin Funding Team and another scheme called Jetcoin.

All four defendants conducted business in South Florida, the lawsuit alleged. Gatto is the only person identified as a resident of the region. None of the men could be located for comment on Friday.

At the FTC’s request, Chief U.S. District Judge K. Michael Moore issued a temporary restraining order against the defendants and froze their assets pending trial, the agency said.

David Lyons can be reached at 954-356-4340, dvlyons@sun-sentinel.com twitter: @davidvlyons