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Screenshot of a breaking news alert e-mail from Q2 2017
The US Department of Justice has announced that a three-count indictment was unsealed yesterday (see below) in federal court in charging Blake Kantor, also known as “Bill Gordon,” with conspiracy to commit wire fraud, obstruction of an official proceeding and making false statements to Special Agents of the FBI. Kantor was arrested by federal authorities yesterday and arraigned.
The indictment alleges that in March 2014 Blake Kantor established a company known as Blue Bit Banc or Blue Bit Analytics, Ltd. (BBB) that sold binary options. To establish Blue Bit Banc, Kantor used approximately $10,000 drawn from a bank account established at a TD Bank branch located in Suffolk County within the Eastern District of New York.
From 2014 to 2017 Kantor and others solicited and took in approximately $2.1 million from approximately 713 investors in BBB’s binary options. Kantor did not inform those investors, however, that a computer software used by BBB allowed the company to fraudulently alter data associated with binary options investments so that the probability of investors earning a profit favored BBB and disadvantaged investors.
To further the scheme, Kantor directed the opening of bank accounts, including one in the island nation of St. Kitts and Nevis, using aliases and the identifying information of other people. Kantor further converted monies that investors invested into ATM Coin, a worthless cryptocurrency that Kantor misleadingly told investors was worth substantial sums of money.
As also alleged in the Indictment, in October 2017 Kantor directed a co-conspirator to alter lists of BBB customers after FBI agents informed Kantor that they were investigating his involvement in binary options. Thereafter, Kantor met with FBI agents and falsely stated in substance that he had not been involved in binary options since August 2013 when, in reality, he had established BBB around March 2014 and was employed there until around October 2017.
Richard P. Donoghue, United States Attorney for the Eastern District of New York stated:
As alleged, Kantor used a computer program to generate manipulated data to cheat hundreds of investors out of their hard-earned savings. To cover-up his fraudulent scheme, Kantor then lied to the FBI and ordered the alteration of documents that would assist agents in identifying his victims. We will continue to work closely with our law enforcement partners to vigorously prosecute individuals who defraud the investing public and obstruct law enforcement’s ability to detect and prosecute financial crimes.
William F. Sweeney, Jr., Assistant Director-in-Charge at the New York Field Office of the FBI said:
The all-or-nothing option Kantor’s victims were offered at the onset of their investment had a predetermined ending, one in which they stood to face significant financial losses, as alleged. The odds were stacked against them from the beginning, while Kantor had everything to gain. The FBI will continue to be a major force in confronting those who think they can evade the law and make an easy profit off the misfortune of others.
“In addition to enforcing the nation’s tax laws, the Special Agents of IRS-Criminal Investigation take particular interest in cases where our expertise is warranted to uncover allegations of financial fraud,” stated IRS-CI Special Agent-in-Charge Robnett. “The allegations outlined in this indictment detail acts of deceit and offshore money movement in the evolving world of cryptocurrency, which impacts the trust investors have with our financial system.”
“The CFTC is committed to working in parallel with our law enforcement partners to ensure that fraudsters in our markets are brought to justice and customers are protected,” stated CFTC Division of Enforcement Director McDonald. “This type of coordination is particularly important in cases like this one, where the alleged scheme stretched across multiple markets, including the market for virtual currencies.”
If convicted, Blake Kantor faces a maximum term of imprisonment of 20 years on each of the conspiracy to commit wire fraud and obstruction of an official proceeding charges and five years on the false statements charge.
The Department of Justice noted that the charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Long Island Criminal Division.
The full unsealed Indictment against Blake Kantor can be seen here (pdf).