UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff,

v.

JON BARRY THOMPSON,

Defendant.

ECF Case No. 19-CV-9052

COMPLAINT FOR INJUNCTIVE 

AND OTHER EQUITABLE RELIEF 

AND FOR CIVIL MONETARY 

PENALTIES UNDER THE 

COMMODITY EXCHANGE ACT 

AND COMMISSION REGULATIONS

JURY TRIAL DEMANDED

Plaintiff Commodity Futures Trading Commission (the “Commission”), by and through 

counsel, alleges as follows: 

I. INTRODUCTION 

1. During the period from at least in or around June 2018 through at least August 

2018 (the “Relevant Period”), Jon Barry Thompson (“Thompson”) employed a deceptive and 

fraudulent scheme by knowingly or recklessly making false representations to customers 

(generally “Customers”) in connection with the purported purchase of virtual currency, 

specifically Bitcoin, worth millions of dollars. Contrary to Thompson’s false representations, 

neither he nor a company with which he was affiliated (the “Escrow Company”) had possession 

or control of the Bitcoin that was to be delivered to the Customers. Bitcoin was never delivered 

to the Customers and Customer funds were not safeguarded as promised. Instead, Thompson 

transferred Customer funds to accounts for the benefit of others, including to one or more 

accounts of at least one company affiliated with Thompson. In an effort to conceal from the 

Customers the fact that they had been defrauded, Thompson made additional false 

representations as to why he was unable to deliver the Bitcoin to them as promised. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 1 of 33
2 

2. By this conduct, and as more fully alleged below, Defendant has engaged, is

engaging, or is about to engage in fraudulent acts and practices in violation of the Commodity 

Exchange Act (“Act”), 7 U.S.C. §§ 1–26 (2012), and Commission Regulations (“Regulations”), 

17 C.F.R. pt. 1–190 (2019), specifically Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), and 

Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2019). 

3. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 (2012), the 

Commission brings this action to enjoin such acts and practices and compel compliance with the 

Act. In addition, the Commission seeks civil monetary penalties and remedial ancillary relief, 

including, but not limited to, trading bans, restitution, disgorgement, rescission, pre- and postjudgment interest, and such other relief as the Court may deem necessary and appropriate. 

4. Unless restrained and enjoined by this Court, Defendant is likely to continue to 

engage in the acts and practices alleged in this Complaint and similar illegal acts and practices. 

II. JURISDICTION AND VENUE 

5. Jurisdiction. This Court has jurisdiction over this action under 

28 U.S.C. § 1331 (2012) (codifying federal question jurisdiction) and 28 U.S.C. § 1345 (2012) 

(providing that U.S. district courts have original jurisdiction over civil actions commenced by the 

United States or by any agency expressly authorized to sue by Act of Congress). In addition, 

Section 6c(a) of the Act, 7 U.S.C. § 13a-1(a) (2012), provides that U.S. district courts have 

jurisdiction to hear actions brought by the Commission for injunctive and other relief or to 

enforce compliance with the Act whenever it shall appear to the Commission that any person has 

engaged, is engaging, or is about to engage in an act or practice constituting a violation of any 

provision of the Act or any rule, regulation, or order thereunder. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 2 of 33
3 

6. The Commission has anti-fraud authority over the conduct and transactions at 

issue in this action pursuant to Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), and Regulation 

180.1(a), 17 C.F.R. § 180.1(a)(2019).

7. Venue. Venue properly lies with the Court pursuant to Section 6c(e) of the Act, 

7 U.S.C. § 13a-1(e), because Defendant is found in, inhabits, or transacts business in this 

District, and because acts and practices in violation of the Act occurred, are occurring, or are 

about to occur, within this District. 

III. THE PARTIES 

8. Plaintiff Commodity Futures Trading Commission (“Commission” or 

“CFTC”) is an independent federal regulatory agency that is charged by Congress with the 

administration and enforcement of the Act and the Regulations. The Commission maintains its 

principal office at Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581. 

9. Defendant Jon Barry Thompson is a resident of Easton, Pennsylvania. 

Thompson has never been registered with the Commission. 

IV. FACTS 

A. Background 

10. Bitcoin is a form of cryptocurrency (a type of virtual currency), which is a 

decentralized, peer-to-peer form of electronic currency. Cryptocurrency is a digital 

representation of value that can be digitally traded and functions as (1) a medium of exchange; 

(2) a unit of account; and/or (3) a store of value, but does not have legal tender status. Unlike 

“fiat currency,” like the U.S. dollar and the Euro, cryptocurrency is not issued by any jurisdiction 

and functions only by agreement within the community of users of that particular currency. 

11. Cryptocurrencies like Bitcoin are held by their owners in electronic “wallets.” 

These wallets have unique addresses, which are designated by a string of letters and numbers. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 3 of 33
4 

Only an individual who possesses the unique “private key” associated with a wallet’s address can 

access the cryptocurrency in that wallet. However, any individual can send cryptocurrency to 

any wallet. An individual does not have to submit any identifying information to any central 

authority to own a wallet, and therefore an individual can easily hold a wallet anonymously. 

12. A blockchain is a public, distributed electronic ledger. Whenever someone 

transfers cryptocurrency between wallet addresses, it is recorded on a blockchain. The 

blockchain records only the movement of cryptocurrency between the addresses; it does not by 

itself identify the holders of the cryptocurrency. The blockchain primarily involved in this case 

is the Bitcoin blockchain. 

13. Under Section 1a(9) of the Act, 7 U.S.C. § 1a(9), a “commodity” includes “all 

other goods and articles, . . . and all services, rights, and interests . . . in which contracts for 

future delivery are presently or in the future dealt in.” This includes virtual currencies, such as 

Bitcoin and other cryptocurrencies. 

14. During the Relevant Period, Thompson and the Escrow Company were engaged 

in the business of purchasing and selling Bitcoin, along with other forms of cryptocurrency, and 

the Escrow Company also acted as an escrow agent for third parties engaged in the purchase and 

sale of Bitcoin. As part of these operations, Thompson solicited and received fiat currency, 

including U.S. Dollars and Euros, from Customers in various states and countries for the purpose 

of entering into or facilitating the Customer’s purchase or sale of cryptocurrency. 

B. Fraud Involving Customer-1 

15. In or about June and July 2018, Thompson induced Customer-1 to send over $3 

million to fund the purchase of Bitcoin after knowingly or recklessly making false 

representations to Customer-1 that he or the Escrow Company had the Bitcoin in hand and 

Customer-1’s money could not be lost. After taking Customer-1’s money and failing to provide 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 4 of 33
5 

any Bitcoin in return, Thompson lied for days about why the deal had not worked out, about the 

location of the Bitcoin that the Escrow Company was supposed to deliver to Customer-1, and 

about Customer-1’s money, which was never returned. 

16. Customer-1 is a business engaged in, among other things, trading Bitcoin and 

other cryptocurrency. Throughout the Relevant Period, Customer-1 maintained offices in Jersey 

City, New Jersey, and New York, New York. 

17. In or about May 2018, the head cryptocurrency trader for Company-1 (the 

“Company-1 Trader”) had a meeting at the office of an individual (“Individual-1”) involved in 

cryptocurrency transactions. During the meeting, Individual-1 told the Company-1 Trader that 

he was the representative of a seller of Bitcoin (“Seller-1”) and that Seller-1 wanted to use the 

Escrow Company as an intermediary to sell its Bitcoin, potentially to Company-1. Individual-1 

did not disclose the identity of Seller-1 to the Company-1 Trader. 

18. On or about June 14, 2018, Individual-1 set up a Telegram chat room for the 

Company-1 Trader, Individual-1, and Thompson. The Company-1 Trader (on behalf of 

Company-1), Thompson (on behalf of the Escrow Company), and Individual-1 (on behalf of 

Seller-1) then began negotiating the purchase of Bitcoin by Company-1 from Seller-1 through 

the Escrow Company. 

19. From the beginning of the discussions, the participants in the chat room 

contemplated that the Bitcoin purchase would involve an escrow agreement. For example, on or 

about June 14, 2018, Thompson emailed the Customer-1 Trader a draft escrow agreement. In 

addition, that same day, the Customer-1 Trader sent Thompson and Individual-1 Telegram 

messages asking “Where is escrow held?” and “I assume fee is paid by seller?” Individual-1 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 5 of 33
6 

responded with the name of a financial institution and “yes, seller wil [sic] pay - just for you 

[first name of the Customer-1 Trader].” 

20. On or about June 20, 2018, Thompson participated in a conference call with the 

Customer-1 Trader, the Chief Operating Officer for Customer-1, and outside counsel for 

Customer-1. At the time of the call, the Customer-1 Trader was in New York, New York. 

21. During this call, Thompson purported to explain to those acting on behalf of 

Customer-1 the service that he and the Escrow Company provided and gave them false 

assurances that using the Escrow Company would eliminate any settlement risk (i.e., the risk that 

the transaction would close without the Bitcoin at issue being transferred to Customer-1). 

Thompson’s false representations on the call included the following: 

 “So we custody assets for folks that are trading, needing to trade, doing stuff, and 

then facilitate the trading. So all we do is process one-sided orders that settle, right, 

and that way everybody who is a member of the network has full rights and there’s no 

risk of settlement failure.” (Emphasis added). 

 “In addition, when, umm, everything is [in] custody with me before the transaction 

commences, or it’s a breach and the transaction can’t start. So cash is with me, coin 

is with me. So the seller sends coin to me, the cash is with me . . . . So the cash and 

coin are both within our control, and then when the transaction prices, we do an 

atomic swap.” (Emphasis added). 

Thompson used the phrase “atomic swap” to mean instantaneously swapping the “cash and 

coin” that was in his possession, i.e., transferring the Bitcoin to Customer-1 and the “cash” to 

Seller-1. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 6 of 33
7 

22. In addition, the parties to the call discussed a two-agreement structure, in which 

Customer-1 would enter one agreement with the Escrow Company and another agreement with 

another company with which Thompson was affiliated (the “Market Making Company”). 

Thompson proposed: 

And as an alternative, right, we have the market-making desk, which is a 

separate legal entity, different stakeholders, different everything, right? 

And if that’s easier, we can just—[the Escrow Company] can act as an 

escrow wrapper. We have another contract with which is a traditional 

escrow wrapper, right? And this exact same transaction can be 

contracted through the market-making desk. That way they can be the 

intermediaries to make the math work, and I can give you our traditional 

escrow agreement just as a wrapper. 

23. On or about the following day, June 21, 2018, the Customer-1 Trader sent 

Thompson a Telegram message attaching a draft master purchase agreement. The Customer-1 

Trader then asked Thompson via Telegram to send a draft escrow agreement. 

24. On or about June 21, 2018, the Customer-1 Trader sent an email to Thompson 

that stated in part: “Please send your escrow agreement.” That same day, Thompson replied to 

the Customer-1 Trader with an email attaching a proposed escrow agreement. 

25. On or about June 22, 2018, Thompson sent the Customer-1 Trader a Telegram 

message regarding the draft master purchase agreement that stated: “[A representative of the 

Escrow Company] can send over. Changes are to make sure it complies with our process from 

the order. Cash and coin both in, in advance of transaction. Pricing, swap, then release.” 

(Emphasis added). Thompson sent this message to Customer-1 Trader in order to have him 

believe that both Customer-1’s cash and Seller-1’s Bitcoin would be in Thompson’s and/or the 

Escrow Company’s control before the transaction commenced. 

26. On or about June 26 to 27, 2018, the Customer-1 Trader and Thompson 

exchanged Telegram messages about the escrow account where Customer-1’s funds were to be 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 7 of 33
8 

held. During those messages, the Customer-1 Trader repeatedly asked for information on the 

security of the escrow account, and Thompson falsely assured the Customer-1 Trader that the 

Escrow Company would maintain control of the cash deposited by Customer-1, and that no one 

outside of the Escrow Company (except for the third-party wallet custodian service (“Wallet 

Custodian”)) would have access to the wallet containing Seller-1’s Bitcoin before it was released 

to Customer-1. Specifically, Thompson and the Customer-1 Trader exchanged the following 

messages (the Customer-1 Trader is referred to as “Trader”): 

Trader: Due to the nature of you being seller/escrow agent at the same time 

[c]an you provide us with any documentation with [the financial 

institution where Customer-1 funds were to be held in escrow (the 

“Escrow Financial Institution”)] so we can understand our security 

on the escrow with them involved?

Thompson: I thought we were going 5o [sic] make [Market Making Company] 

market making seller and [Escrow Company] escrow the escrow?

Thompson: [Escrow Financial Institution] is just an omnibus account.

Thompson: This is why we segmented the transaction.

Trader: Correct, but its semantics no? You are controller of both businesses

Trader: To be clear, the MPA [master purchase agreement] says [the 

Escrow Company n]ot the market making side.

Thompson: Yes, it should say [the Market Making Company].

Thompson: Slip on lawyers side, I did not share that with them. My mistake.

Trader: I assume you are a beneficial owner of [the Market Making 

Company]?

Thompson: Partial, but control is [another individual].

Trader: It creates a conflict of interest so that’s why we need extra security 

in the escrow agreement

Trader: Or at least some added language

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 8 of 33
9 

Trader: Barry [Thompson] - will the BTC [Bitcoin] be sent to our wallet 

before the cash is sent to the seller after the transaction takes place?

Trader: What transaction takes place first?

Trader: It’s not specified in your escrow contract.

Trader: Who controls the private key to the wallet where the coins are 

sitting prior to the transaction?

Trader: if you can explain that piece i think we’ll be good to go.

Trader: We can sign this mpa [master purchase agreement] and do a test 

trade tomorrow

Thompson: [Wallet Custodian]. We never have control

Trader: [Wallet Custodian] custody’s [sic] the private key which 

is owned by whom?

Thompson: Owned or controlled? Radically different meaning

Trader: Who has access to the private key prior to the trade

Thompson: Everything at [Wallet Custodian] is a multisig [multisignature] 

environment where the keys

Thompson: are segmented between a third-party trustee [Wallet Custodian] and 

the signatures. And as such [the Escrow Company] exercises the 

execution control, the customer does not. Otherwise you could 

withdrawal [t]he funds in the middle of a transaction. In addition, 

we do sometimes support true multisig with the customer, but for 

this use case that would actually radically slow down the 

conversation and the transaction.

Thompson: So lets say the coin is in a wallet at [Wallet Custodian], who 

are the parties involved that must authorize the transaction

Thompson: [the Escrow Company] executes, customer instructs

Trader: So there is no point whereby the seller can call [Wallet Custodian]

and ask for his coins to be moved

Thompson: Absolutely not. They have no legal standing to even engage or talk 

to [Wallet Custodian] in any way shape or form. If they have a 

login for authorization or other items related to that it’s still under 

the [the Escrow Company’s] command-and-control. Under no 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 9 of 33
10 

circumstances Shelly [sic] buyer or seller ever have the ability to 

impact the transaction or withdrawal assets without [the Escrow 

Company’s] approval.

Trader: The cash that is moved within the omnibus [account] - you control 

right?

Trader: Let’s say I don’t want to do a trade.

Trader: how do i get my money out of that account.

Thompson: You place a withdraw order and it is executed in the next hour of 

business hours.

27. Thompson reassured the Customer-1 Trader that Seller-1, whose identity was 

unknown to Customer-1, could not interfere with the transaction because the Escrow Company 

exercised “command-and-control” over the Bitcoin stored in a wallet with Wallet Custodian. 

Thompson informed the Customer-1 Trader that Seller-1 had no “legal standing” to “engage or 

talk to [Wallet Custodian] in any way shape or form” and “only [the Escrow Company] had 

execution control over this transaction.” Further, Thompson assured the Customer-1 Trader that 

the Escrow Company also controlled the cash that Customer-1 would send, so Customer-1 could 

simply ask for its money to be returned if Customer-1 decided not to trade before the transaction 

occurred. 

28. On or about June 27, 2018, Thompson emailed the Customer-1 Trader a welcome 

package with wire instructions. The wire instructions directed that funds to be transmitted by US 

Fedwire should pass through a specified bank in New York, for further credit to an account “c/o 

J. Barry Thompson” at the Escrow Financial Institution, also located in New York, New York 

(the “Escrow Bank Account”). Thompson was the only authorized signatory on the account. 

29. Among other things, the welcome package included flow charts to explain what 

happens to currency transferred into the Escrow Bank Account. The flow charts show that after 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 10 of 33
11 

the customer transfers money, the Escrow Company will confirm receipt and a formal audit trail 

will be issued showing the customer the current account balance. The flow charts also show that 

the customer must confirm amounts to be transferred from the Escrow Bank Account. The flow 

charts do not indicate that currency may be transferred to accounts of third parties without the 

customer’s approval and without either the Escrow Company or the customer receiving the 

Bitcoin. 

30. On or about June 27, 2018, the Customer-1 Trader emailed Thompson an 

executed version of the Master Purchase Agreement (the “MPA”) between Customer-1 and the 

Market Making Company. The MPA falsely represented that “[the Market Making Company] is 

a limited liability company organized under the laws of the state of Delaware.” The MPA was 

counter-executed by Thompson on behalf of the Market Making Company as its “Director, 

Escrow Transaction Coordination.” 

31. On or about June 28, 2018, Thompson emailed the Customer-1 Trader the 

counter-executed escrow agreement (the “Escrow Agreement”). Under the Escrow Agreement, 

the Market Making Company, as the immediate seller of the Bitcoin, and Customer-1, as the 

buyer, engaged the Escrow Company to hold and disburse assets in accordance with the terms 

and conditions of the MPA. The Escrow Company was to function as a “depository” to facilitate 

trades between the Market Making Company and Customer-1. The Escrow Agreement further 

provided that, as to escrow fees, “[t]he Parties are liable for the fees set forth in the Master 

Purchase Agreement.” 

32. Exhibit A to the Escrow Agreement set forth the Default Transaction Procedures. 

It provided that once the fiat cash and Bitcoin are in place, “the transaction commences through 

the atomic swap process,” by which the “[Bitcoin] are transferred from the Seller’s [Escrow 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 11 of 33
12 

Company] account to the Buyer, while simultaneously, [t]he notional Fiat value is transferred 

from the Buyer’s sub account at [the Escrow Company] to the Seller’s Sub account at [the 

Escrow Company].” 

33. In this transaction, while the Market Making Company acted as the “seller” of the 

Bitcoin pursuant to the agreements, Customer-1 understood from the discussions leading up to 

the agreements that Thompson, the Escrow Company, and the Market Making Company were in 

fact selling Bitcoin that they would acquire from Seller-1. Customer-1 and Thompson had 

discussed how Customer-1 wanted to buy 1,000 Bitcoin per day from Seller-1 and other thirdparty sellers over the course of multiple transactions. 

34. According to the Default Transaction Procedures, the Escrow Company would 

receive cash and cryptocurrency into its respective escrow accounts for Customer-1 and the 

Market Making Company. The transaction would then be settled “through the atomic swap 

process.” The Escrow Agreement does not indicate that currency may be transferred out of any 

party’s escrow account, or out of the Escrow Company’s control, into the accounts of third 

parties before the transaction is completed. 

35. In addition, the Escrow Agreement provides that the Escrow Company “may not 

assign or delegate its rights or obligations hereunder without the prior written consent of the 

Parties, which may be withheld in the Parties [sic] sole discretion.” 

36. On or about June 28, 2018, Thompson emailed the Customer-1 Trader an order 

form for a 100 Bitcoin test purchase by Customer-1. The purpose of the test purchase was to 

confirm that the process of buying Bitcoin through the Escrow Company worked as expected 

before engaging in transactions of 1,000 Bitcoin per day. The Customer-1 Trader later emailed 

an executed version of the order form to Thompson.

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 12 of 33
13 

37. On or about June 28, 2018, Customer-1 wired $650,000 to the Escrow Bank 

Account in order to fund the purchase of 100 Bitcoin. 

38. On or about June 28, 2018, Thompson and the Customer-1 Trader exchanged text 

messages about the transaction. At approximately 3:46 pm, the Customer-1 Trader texted 

Thompson: “On for 5 [pm]?” Thompson responded: “Am tomorrow. Just wrapping up paper 

on it and have these folks for the larger bits. One of you [sic] primary sellers stepped up to do it 

in the am for you in advance of the larger tranches. So you are bundled for am execution.” 

Thompson later sent a text message: “They [the sellers] are loading coin overnight. I will not run 

the transaction until I have coin in hand.” (Emphasis added). 

39. On or about Friday, June 29, 2018—the morning of the scheduled test—

Thompson and the Customer-1 Trader exchanged Telegram messages about the transaction. 

Although Thompson had previously represented that the transaction would take place in the 

morning, Thompson suggested in the Telegram messages that he could not complete the 

transaction in the morning, but that the “2 o’clock slot [was] wide open.” 

40. Later that same day, Thompson and the Customer-1 Trader exchanged text 

messages about the transaction. When the Customer-1 Trader asked if they were executing the 

trade at 2 pm, Thompson replied, “Not at discount. Getting folks to load an unplanned 100 coins 

at the poo [sic] price today is really difficult. 100 is committed on the order for Monday [July 

2].” 

41. Also on or about June 29, 2018, the Customer-1 Trader emailed Thompson to ask, 

in sum and substance, for an account statement for the funds sent by Customer-1 to be held in 

escrow. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 13 of 33
14 

42. On or about July 1, 2018, Thompson emailed the Customer-1 Trader and attached 

a “Portfolio Status Report.” According to the Portfolio Status Report, Customer-1’s account 

contained, as of June 30, 2018, the $650,000 that Customer-1 had sent to the Escrow Bank 

Account. In reality, as of June 30, 2018, the Escrow Bank Account into which Customer-1 had 

wired $650,000 had a balance of only $636,380.19. In fact, approximately $14,000 of Customer1’s funds were transferred out of the Escrow Bank Account to third parties for a use other than 

executing the 100 Bitcoin transaction and Thompson did not disclose this information to 

Customer-1. 

43. The Escrow Bank Account was not used by Thompson solely for Customer-1’s 

funds; rather, Thompson engaged in multiple other deposits and transfers/withdrawals using the 

Escrow Bank Account. As of June 27, 2018, the Escrow Bank Account held approximately 

$15,402.53. On June 28 and 29, 2018, in addition to the $650,000 received from Customer-1, 

funds from other sources were transferred into the account totaling approximately $231,954.16 

and several transfers were made out of the account totaling approximately $260,977.20. In 

particular, on June 29, 2018, while holding Customer-1’s money in custody for the intended 

Bitcoin transaction, Thompson transferred $20,000 from the Escrow Bank Account to an account 

in the name of another company he was affiliated with (“Account 2”), from which the money 

was then wired to a bank account of a separate company (“Company A”). 

44. On or about July 2, 2018, Thompson and the Customer-1 Trader exchanged text 

messages about the 100 Bitcoin transaction, which had still not been completed. In one of the 

messages, Thompson stated that the transaction had not gone through because the “[p]rice is high 

and other party does not have enough cash.” Thompson was claiming that another Bitcoin buyer 

with whom Thompson had planned to bundle Customer-1’s order for 100 Bitcoin in order to 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 14 of 33
15 

purchase a larger amount of Bitcoin at a discounted price did not have enough cash to complete 

their part of the purchase. 

45. Also on July 2, 2018, the Customer-1 Trader participated in a phone call with 

Thompson and Individual-1. The Customer-1 Trader was in New York, New York, near 

Customer-1’s offices, during the call. Thompson and Individual-1 told the Customer-1 Trader 

on the call that the Bitcoin transaction needed to involve a minimum of 500 Bitcoins. Thompson 

also told the Customer-1 Trader that Thompson had the Bitcoin in hand. 

46. Later on or about July 2, 2018, the Customer-1 Trader and Thompson exchanged 

additional text messages about the 500 Bitcoin transaction (the Customer-1 Trader is referred to 

as “Trader”):

Trader: I don’t get why the seller won’t accommodate a 100 lot

Trader: As a test

Thompson:

on with folks to get backup...will call you in 15

Trader: Hey you have the coin in hand right?

Trader: I will send you the cash for 500 [Bitcoin]

Trader: I want the trade today

Thompson: Ok. Yes

Thompson: Ok

Thompson: Will start liking it up

Thompson:

Lining

Thompson: Aka kicking the other guy out [smiley face emoji]

Thompson: I am unlikely to get it over today though because I have to move money off 

of exchanges

Thompson: And that could take time

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 15 of 33
16 

Trader: Still Chase for the 400 lot guy concurrently

Thompson: Ok. Understood Ok. Will line it up for tomorrow

47. In this conversation, the Customer-1 Trader offered to buy the remaining 400 

Bitcoin himself to help solve Thompson’s purported difficulty arranging for another buyer of the 

remaining 400 Bitcoin. The Customer-1 Trader asked that Thompson continue pursuing his 

other purported buyer to see if the other person could buy the 400 Bitcoin while the Customer-1 

Trader obtained the money to fulfill the entire order. 

48. Thompson’s representation that he and/or the Escrow Company had the Bitcoin in 

hand on or about July 2, 2018, was false. Thompson later admitted under oath in another 

proceeding that he understood the Bitcoin to be in the custody of a “sub-escrow agent” who was 

a lawyer in Florida. 

49. Based on Thompson’s fraudulent representation that he and/or the Escrow 

Company had the 500 Bitcoin in hand and his fraudulent representation that he would keep 

custody of Customer-1’s cash until there was an “atomic swap” of cash and Bitcoin, on or about 

July 3, 2018, at approximately 9:28 am, Customer-1 wired an additional $2.6 million into the 

Escrow Bank Account. This transfer of $2.6 million on July 3, 2018, brought the total funds 

wired from Customer-1 to the Escrow Bank Account to $3.25 million. The additional cash was 

to fund the purchase of the remaining 400 Bitcoin, for a total of 500 Bitcoin. 

50. Customer-1 would not have wired the $2.6 million if not for Thompson’s false 

representations, including: (1) his false representation that he and/or the Escrow Company had 

the 500 Bitcoin in hand, and (2) his false representations that he and/or the Escrow Company 

would not transfer Customer-1’s money from the Escrow Bank Account unless Thompson and/or 

the Escrow Company had custody of the Bitcoin.

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 16 of 33
17 

51. On or about July 3, 2018, beginning at approximately 12:03 pm, the Customer-1 

Trader and Thompson exchanged emails regarding the expected Bitcoin trade. In particular, in 

one email, Thompson stated “[p]lease see the execution report on the transaction just 

completed,” and then represented that Customer-1 had purchased 500 Bitcoins for a total price of 

$3,191,067.20. In the same email, Thompson told the Customer-1 Trader that he was sending a 

test transaction to Customer-1’s wallet.1

52. On or about July 3, 2018, at 2:05 pm, the Customer-1 Trader sent Thompson an 

email confirming that Customer-1 had received the test transaction. The Customer-1 Trader then 

asked Thompson to send the 500 Bitcoin. 

53. On or about July 3, 2018, at approximately 3:39 pm, the Customer-1 Trader sent 

Thompson a message requesting the Bitcoin “immediately.” At approximately 3:44 pm, 

Thompson sent the Customer-1 Trader an email that said: “We had a white list issue between 

the two accounts we have internally and have to unlock the white list, which is what I was doing 

while you were calling. [Wallet Custodian] is clearing and it will go out.” In this context, 

“white list” refers to a wallet holder pre-approving with a wallet custodian only certain recipient 

wallet addresses so that Bitcoin cannot inadvertently be sent from an owner’s wallet to other, 

non-approved addresses. 

54. On or about July 3, 2018, the Customer-1 Trader sent additional emails to 

Thompson seeking an update on the status of the transaction. 

55. Thompson and/or the Escrow Company did not send the 500 Bitcoin to Customer1’s wallet on July 3, 2018, as promised. Nor did Thompson and/or the Escrow Company 

maintain Company-1’s cash in the Escrow Bank Account. Rather, on or about July 3, 2018, the 

 

1

 It is common for parties in cryptocurrency transactions to send the smallest unit of Bitcoin, 0.00000001 Bitcoin, 

before conducting a larger transaction to ensure that the sender entered the destination wallet address (a long string 

of letters and numbers) correctly and that the counterparty received the test amount 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 17 of 33
18 

same day Customer-1 had wired $2.6 million to the Escrow Bank Account, Thompson wired 

approximately $3,090,250 from the Escrow Bank Account to a bank account held by a law firm 

in Florida.2

56. Also on July 3, 2018, Thompson wired approximately $100,000 from the Escrow 

Bank Account to Account 2. The $100,000 transferred to Account 2 was then wired to the bank 

account for Company A. 

57. On or about July 4, 2018, the Customer-1 Trader emailed Thompson to ask for a 

time frame for the delivery of the Bitcoin. That same day, the Customer-1 Trader and Thompson 

engaged in a text message conversation about the Bitcoin transaction. 

58. During the text message conversation, Thompson made several false 

representations regarding the status of the trade: 

• “Issue should be solved, but getting someone into the back office now to 

get released just taking time since everybody’s a few hours out, I have 

someone driving back to the office so that they can start the release. Not 

sure what time they’re ETA is.” 

• “[Two] party release is required. It was fixed overnight.” 

• “I am making [name of employee] drive 3.5 hours back from camping with 

her fimily [sic] to put it in th [sic] system as she is the closest and on call for 

the day. [Transaction will go through] when she is in.” 

59. Customer-1 did not receive the 500 Bitcoin in its wallet on July 4, 2018, as 

promised by Thompson. 

60. On or about July 5, 2018, at approximately 7:42 am, the Customer-1 COO 

emailed Thompson to ask for an update on the transaction. Shortly thereafter, Thompson 

responded that “it is set to clear in the morning batch.” 

 

2 Between on or about June 28, 2018, when Customer-1 had sent approximately $650,000 to the Escrow Bank 

Account and July 3, 2018, when Customer-1 wired the additional $2.6 million to that account, the Escrow 

Bank Account received deposits from other entities.

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 18 of 33
19 

61. Beginning at approximately 9:29 am on July 5, 2018, Thompson and the 

Customer-1 Trader exchanged numerous text messages about the transaction. In those messages, 

in sum and substance, the Customer-1 Trader repeatedly inquired about the status of the 

transaction and Thompson provided false reasons for the delay. For example, at one point, 

Thompson stated, “I am on the phone fixing the wallet security item from Tuesday, it’s a quick 

fix. . . . Just need to reset.” In sworn testimony, Thompson admitted this statement was not 

accurate and that he was attempting to buy time. 

62. Customer-1 did not receive the 500 Bitcoin in its wallet on July 5, 2018, as 

promised by Thompson. 

63. From approximately July 6 to July 8, 2018, Thompson continued to represent to 

Customer-1 that the Bitcoin transaction would be completed. 

64. On or about July 9, 2018, Customer-1 demanded that Thompson return 50% of 

the $3.25 million that Customer-1 had wired to the Escrow Bank Account. That same day, in a 

text message to the Customer-1 Trader, Thompson represented that Customer-1 would receive 

the money back “this afternoon.” No money was returned to Customer-1 that day. 

65. On or about July 10, 2018, Thompson emailed the Customer-1 Trader and stated: 

“[First name of the Customer-1 Trader] as I indicated around 1 pm you will get the wire today as 

soon as we process the items we discussed.” 

66. The $3.25 million that Customer-1 sent to the Escrow Bank Account in total was 

never returned to Customer-1, nor did Customer-1 ever receive the 500 Bitcoin it purchased.3

C. Fraud Involving Customer 2 

67. In or about July 2018, Thompson induced Customer-2, after knowingly or 

recklessly making false representations, to send to the Escrow Company over $4 million to fund 

 

3

 Customer-1 did not receive any Bitcoin from Volantis other than the 0.00000001 that had been sent as a test. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 19 of 33
20 

the purchase of Bitcoin. After receiving Customer-2’s money, Thompson sent virtually all of the 

money to a third party without first receiving any Bitcoin in return. Customer-2 was never 

provided with any Bitcoin, nor was any money returned to Customer-2. Thompson also lied to 

Customer-2 about the location of the Bitcoin and the reasons the transaction was not completed. 

68. Customer-2 is a business based in Ireland that trades cryptocurrency. 

69. In or about March 2018, the Chief Executive Office of Customer-2 (the 

“Customer-2 CEO”) spoke with Thompson by phone. During that first call, Thompson provided 

a high-level overview of how the Escrow Company operated as an escrow agent to eliminate 

counterparty risk in cryptocurrency transactions. 

70. On or about May 24, 2018, Thompson emailed the Customer-2 CEO documents 

that provided an overview of the Escrow Company. The overview documents represented that 

the Escrow Company “provides a global framework of accounts and transaction facilitation 

infrastructure that minimizes settlement default risk and delays regulatory complexity.” 

(Emphasis added). The overview documents further represented that it “holds assets in escrow 

within segmented customer accounts” (emphasis added), and that because the Escrow Company 

is “asset custodian for the both sides of the transaction, there is no risk of default” (emphasis 

added). Finally, the overview documents noted that transactions “are pre-funded and typically 

settle in real-time.” 

71. The overview documents also stated, “As part of the [Escrow Company’s] 

service, compliance is integrated into everything we do,” and represented that “[c]ounterparty 

risk management and compliance-related activities” (emphasis added) are provided.

72. In or about July 2018, the Customer-2 CEO and Thompson began negotiating a 

Bitcoin transaction for which the Escrow Company would act as an escrow agent. On or about 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 20 of 33
21 

July 14, 2018, Thompson told the Customer-2 CEO that he had two sellers available and that he 

was loading the sellers’ Bitcoin onto his platform. 

73. On or about July 20, 2018, Customer-2 and the Escrow Company entered into an 

Escrow Services Agreement (the “Customer-2 Escrow Agreement”), under which Customer-2 

engaged the Escrow Company to hold and disburse assets for Customer-2 at Customer-2’s 

direction. The Customer-2 Escrow Agreement provided that the Escrow Company would 

receive a one-time escrow fee of 1.5% of each asset deposited with the Escrow Company, plus 

additional monthly fees at a minimum of $2,500. Thompson signed the Customer-2 Escrow 

Agreement on behalf of the Escrow Company as Managing Member. 

74. The Customer-2 Escrow Agreement does not indicate that cash may be 

transferred out of any party’s escrow account into the accounts of third parties before a 

transaction is completed. It expressly provides that the Escrow Company “may not assign or 

delegate its rights or obligations hereunder without the prior written consent of Customer, which 

may be withheld in Customer’s sole discretion.” 

75. On or about July 23, 2018, Thompson emailed the Customer-2 CEO and 

Customer-2’s Chief Operating Officer a welcome package outlining the way orders are 

processed by the Escrow Company. The welcome package included wire instructions, which 

stated that funds were to be wired through a bank account in New York, New York. 

76. On or about July 23, 2018, Thompson and the Customer-2 CEO discussed the 

transaction over the phone. Thompson reassured the Customer-2 CEO, in sum and substance, 

that he and/or the Escrow Company had the seller’s Bitcoin. The Customer-2 CEO had made 

clear to Thompson in prior conversations that Customer-2 would transact with the Escrow 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 21 of 33
22 

Company only if the Bitcoin was in the Escrow Company’s possession, and Thompson agreed to 

this arrangement. 

77. Separately, on or about July 23, 2018, Thompson emailed a cryptocurrency broker 

(“Broker”) to discuss a transaction involving the purchase of Bitcoin from another company 

(“Seller-2”). Thompson’s email outlined the process for his planned purchase of the Bitcoin 

from Seller-2. Thompson’s email stated that the Escrow Company would transfer the funds (i.e., 

what ultimately were Customer-2’s funds) to purchase the Bitcoin to a third-party escrow (the 

“Third-Party Escrow”) before the Third-Party Escrow would send the Bitcoin to the Escrow 

Company on behalf of Seller-2. Thompson’s plan to buy Bitcoin (for Customer-2) by sending 

Customer-2’s funds to a Third-Party Escrow before the Third-Party Escrow provided Seller-2’s 

Bitcoin to the Escrow Company was directly contrary to Thompson’s assurances to Customer-2 

that its funds would not be transferred until the Bitcoin was in the control of the Escrow 

Company. 

78. On or about July 24, 2018, Thompson and Seller-2 entered into a contract for the 

Escrow Company to purchase Bitcoin from Seller-2 (the “Sales Contract”). Under the Sales 

Contract, the Escrow Company agreed to purchase tranches of Bitcoin from Seller-2 on a weekly 

basis, at a 6% discount. The Sales Contract provided that the first tranche would be for 500 

Bitcoin, with additional tranches to be decided one week in advance. The Sales Contract 

provided that all payments from the Escrow Company for the Bitcoin were to be paid out of a 

bank account in New York, New York. An appendix to the Sales Contract provided that the 

Third-Party Escrow would act as an escrow agent for the transactions. 

79. On or about July 23, 2018, the Customer 2 CEO also asked Thompson to 

demonstrate that he possessed the Bitcoin that Customer-2 intended to buy. On or about July 24, 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 22 of 33
23 

2018, Thompson provided the Customer-2 CEO with a wallet address for the source of Bitcoin 

controlled by the seller that Thompson claimed would be the “root of the fill” for the Bitcoin that 

Customer-2 was agreeing to purchase. Thompson attached a report for the wallet address that 

showed the wallet contained over 10,000 Bitcoin at that time. Thompson did not inform the 

Customer-2 CEO in that e-mail that he would transfer the money from Customer-2 to a third 

party before the Bitcoin would be in Thompson’s control. 

80. Also on or about July 24, 2018, Thompson emailed the Customer-2 COO with a 

block order form for Bitcoin transactions. The block order form provided that the order would 

be for the purchase of up to 6,600 Bitcoin, on a schedule of 500 Bitcoin a day for the week of 

July 23rd, and 1,000 Bitcoin per day for the week of July 30th. The order form—unlike the 

similar order form Thompson had provided to Customer-1 in June 2018 and which had resulted 

in an arbitration proceeding filed against Thompson days prior, on July 17, 2018—further 

provided that the transaction was a “multi-escrow execution managed by [the Escrow Company]. 

All processes fit within the process structure outlined above.” The order form provided, among 

other things, that the Escrow Company “validates Fiat Capital and Coin for daily tranche as 

ready-by 7 am ET.” The order form did not explain the term “multi-escrow execution managed 

by [the Escrow Company],” nor did it state that any money would be transferred out of the 

escrow account where Customer-2’s funds were being held before the Escrow Company or 

Customer-2 received any Bitcoin. 

81. Based on Thompson’s representations to Customer-2 that he and/or the Escrow 

Company would hold the funds until Thompson and/or the Escrow company had control of the 

Bitcoin being purchased, on or about July 24, 2018, Customer-2 executed the block purchase 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 23 of 33
24 

order and wired €3.6 million from a bank in Europe to the Escrow Bank Account in New York. 

These funds were received on or about July 25, 2018. 

82. On or about July 26, 2018, over the course of the day, the Customer-2 CEO and 

Thompson exchanged the following text messages about the order: 

Thompson: [Name of CEO], Please call. Back office just called and we have 

a few hour delay in execution this am due to seller availability I 

need to know how to handle (kill/delay/execute). Please call.

Customer-2 CEO: Feel like killing my [sic] myself . . . [smiley face emoji]. Give me a 

min I had just started to move to make the trades.

Thompson: This is why I reaching out as soon as we had the alert at 5:30

Customer-2 CEO: Hi mate, any update on timing? 

Thompson: I’ll call you right back

Customer-2 CEO: Getting late and I’m getting really [sad face emoji]

Thompson: Me too. I am hammering them now 

Customer-2 CEO: Please tell the seller to sort this. We trade tomorrow or I’m more 

than likely going to pull away from this seller. Realize other sellers 

with you and we can discuss but messy so far

Thompson: Yes. I went there 45 minutes ago

Customer-2 CEO: Barry, I will be in bed next 30–40 mins.

Any update on timing?

83. On or about July 27, 2018, the Customer-2 CEO emailed Thompson to confirm 

that Customer-2 had accepted a trade of 500 Bitcoin at the price of €6,607 per Bitcoin. The 

Customer-2 CEO’s email further noted that Customer-2 had wired €3.6 million into the Escrow 

Bank Account, so, at that price per Bitcoin, its balance would be €296,500.50 after the trade. 

Later that same day, the Customer-2 CEO emailed Thompson, stating, among other things, 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 24 of 33
25 

“Address has been reconfirmed via Telegram, including QR.” Thompson responded to the 

Customer-2 CEO and stated “Updated wallet address received.” 

84. On or about July 27, 2018, three days after receiving Customer-2’s funds, without 

receiving any Bitcoin from the Third-Party Escrow or Seller-2, Thompson converted €3.5 

million of Customer-2’s €3.6 million into U.S. dollars ($4,066,107.50) and then wired 

approximately $4,024,914.56 from the Escrow Bank Account to an account held by the ThirdParty Escrow. 

85. Customer-2 did not receive the 500 Bitcoin on July 27, 2018, as Thompson 

promised. 

86. Beginning on or about July 27, 2018, the Customer-2 CEO and Thompson 

exchanged numerous text messages about the status of the order. In those text messages, 

Thompson falsely represented, in sum and substance, that he would be able to release the Bitcoin 

to Customer-2 once a wire transfer made it to the counterparty’s account. In one message, 

Thompson stated, “I’m just finding out if they received the wire. Then I can release.” In another 

text message on or about July 28, 2018, Thompson continued making false statements to the 

Customer-2 CEO about the status of the transaction. Thompson stated that he was “working the 

seller outside the escrow [to] force release” and that “worst case” he would go to the executives 

of the mining groups4

so they could “override everybody and authorize me to release.” 

87. On July 30, 2018, Thompson falsely stated in a message to the Customer-2 CEO: 

“Just got text the key fragments in to start moving to the hot wallet so we can move out of 

[Wallet Custodian]. Going to be a few minutes yet (40 is worst case).” 

 

4 Bitcoin mining is the process of verifying transactions that are added to the Bitcoin blockchain, for which the 

miner receives newly-created Bitcoin.

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 25 of 33
26 

88. Thompson’s statements to Customer-2 CEO were false, because neither he nor the 

Escrow Company had possession of the Bitcoin at the time, nor did either of them have the 

ability to release the Bitcoin to Customer-2. 

89. In multiple emails among Thompson and representatives of Seller-2 between on 

or about July 27 and August 6, 2018, Thompson asked Seller-2 to transfer the Bitcoin to a wallet 

under Thompson’s control. Rather than merely seeking authorization to release the Bitcoins to 

Customer-2, in emails on July 28 and July 30, 2018, Thompson asked the seller for “a timeline of 

coin fill,” and complained that the “deadline on delivery of Coin” had passed. 

90. In sworn testimony in a civil proceeding in or about October 2018, Thompson 

testified, contrary to his statements to the Customer-2 CEO that he would be able to release the 

coins, that the Bitcoin never came and that while the counterparty was “to this day” telling 

Thompson they would “deliver coin,” he did not believe it.

91. Customer-2 had not received any Bitcoin by July 31, 2018. On that day, the 

Customer-2 CEO emailed Thompson to ask that Thompson either engage in discussions or return 

the €3.6 million immediately. No money was returned to Customer-2 that day. 

92. In fact, days later, on or about August 8, 2018, Thompson converted the 

remaining €100,000 of Customer-2’s money to U.S. dollars (worth $115,620.80) and, rather than 

returning it to Customer-2, transferred $100,000 to Account 2. Just as he had done with 

Customer-1’s money, Thompson then wired the $100,000 from Account 2 to account in the 

name of Company A. 

93. The Bitcoin transaction between Customer-2 and the Escrow Company was never 

completed. Customer-2 never received any Bitcoin and none of the €3.6 million sent by 

Customer-2 was returned to Customer-2. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 26 of 33
27 

CLAIMS FOR RELIEF FOR VIOLATIONS OF THE 

COMMODITY EXCHANGE ACT AND REGULATIONS 

Count I—Fraud by Deceptive Device or Contrivance 

Violations of Section 6(c)(1) of the Act and Regulation 180.1(a) 

94. Paragraphs 1 through 93 are re-alleged and incorporated herein by reference. 

95. Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), makes it unlawful for any 

person, directly or indirectly, to: 

use or employ, or attempt to use or employ, in connection with any 

swap, or a contract of sale of any commodity in interstate 

commerce, or for future delivery on or subject to the rules of any 

registered entity, any manipulative or deceptive device or 

contrivance, in contravention of such rules and regulations as the 

Commission shall promulgate by not later than 1 year after [July 

21, 2010, the date of enactment of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act] . . . . 

96. Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2019), provides: 

It shall be unlawful for any person, directly or indirectly, in 

connection with any swap, or contract of sale of any commodity in 

interstate commerce, or contract for future delivery on or subject to 

the rules of any registered entity, to intentionally or recklessly: 

(1) Use or employ, or attempt to use or employ, any manipulative 

device, scheme, or artifice to defraud; 

(2) Make, or attempt to make, any untrue or misleading statement 

of a material fact or to omit to state a material fact necessary in 

order to make the statements made not untrue or misleading; 

(3) Engage, or attempt to engage, in any act, practice, or course of 

business, which operates or would operate as a fraud or deceit 

upon any person . . . . 

97. During the Relevant Period, as described above, Thompson violated 

Section 6(c)(1) of the Act and Regulation 180.1(a) by, among other things, in connection with 

contracts of sale of commodities in interstate commerce, using or employing, or attempting to 

use or employ, a manipulative device, scheme, or artifice to defraud, making or attempting to 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 27 of 33
28 

make untrue or misleading statements of material fact or omitting to state or attempting to omit 

material facts necessary in order to make statements made not untrue or misleading, and 

engaging or attempting to engage in a course of business operating as a fraud or deceit upon 

Customer-1 and Customer-2 as follows: 

A. Soliciting funds from the Customers through oral representations 

misrepresenting the services provided by the Escrow Company by stating, 

among other things, that it acted as an escrow service and, under its process, 

the Escrow Company would have control over both the cash from the 

customer intending to purchase Bitcoin and the Bitcoin from the respective 

seller and would make an “atomic swap,” i.e. a simultaneous exchange, when, 

in fact, Thompson, on behalf of the Escrow Company transferred Customer-1 

and Customer-2’s funds to a third-party without having the Bitcoin and 

making a simultaneous exchange; 

B. Soliciting Customer-1 and Customer-2 through oral representations falsely 

representing that the use of the Escrow Company eliminated the risk of 

settlement failure when, in fact, the Escrow Company transferred each 

Customer’s funds to a third party without having control over the Bitcoin 

being purchased, thus creating the risk that the Customer’s funds would be 

taken without a corresponding transfer of Bitcoin, which did ultimately occur; 

C. Issuing a written Portfolio Status Report to Customer-1, misleadingly 

suggesting that Customer-1’s funds had been kept safeguarded when, in fact, 

approximately $14,000 of Customer-1’s funds had already been transferred to 

third parties for a use other than executing Customer-1’s Bitcoin transaction; 

D. Issuing written materials to Customer-1 and Customer-2 that provided an 

overview of the Escrow Company’s service falsely stating that that there is no 

risk of default for the assets it holds in escrow and that the Escrow Company 

protects customers against counterparty risk when, in fact, the Escrow 

Company transferred each Customer’s funds to a third party without having 

control over the Bitcoin being purchased, thus creating the risk that the 

Customer’s purchase would not be completed, which did ultimately occur; 

E. Making false written and oral statements as to the reasons Customer-1 had not 

received its Bitcoin; and 

F. Taking portions of the funds that Customer-1 and Customer-2 had sent to the 

Escrow Company for the sole purpose of purchasing Bitcoin and transferring 

that money to other accounts for a purpose other than the purchase of Bitcoin 

and concealing from the Customers that their funds had been transferred for 

unauthorized purposes. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 28 of 33
29 

98. Thompson engaged in the acts and practices described above intentionally or 

recklessly. 

99. By this conduct, Thompson violated Section 6(c)(1) of the Act and 

Regulation 180.1(a). 

100. Each act of: (1) using or employing, or attempting to use or employ, a 

manipulative device, scheme, or artifice to defraud; (2) making, or attempting to make, untrue or 

misleading statements of material fact, or omitting to state material facts necessary to make the 

statements not untrue or misleading; and (3) engaging, or attempting to engage, in any act, 

practice, or course of business, which operated or would operate as a fraud or deceit upon any 

person, including but not limited to those specifically alleged herein, is alleged as a separate and 

distinct violation of Section 6(c)(1) of the Act and Regulation 180.1. 

V. RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that the Court, as authorized by 

Section 6c of the Act, 7 U.S.C. § 13a-1 (2012), and pursuant to its own equitable powers, enter: 

A. An order finding that Defendant violated Section 6(c)(1) of the Act, 

7 U.S.C. § 9(1) (2012), and Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2019); 

B. An order of permanent injunction enjoining Defendant and any other person or 

entity associated with him, including but not limited to affiliates, agents, servants, 

employees, assigns, attorneys, and all persons in active concert or participation 

with Defendant, including any successor thereof, from: 

i. Engaging, directly or indirectly, in conduct in violation of Section 6(c)(1) 

of the Act or Regulation 180.1(a); 

ii. Trading on or subject to the rules of any registered entity (as that term is 

defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40) (2012));

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 29 of 33
30 

iii. Entering into any transactions involving “commodity interests” (as that 

term is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2019)), for his own 

personal account(s) or for any account in which Defendant has a direct or 

indirect interest; 

iv. Having any commodity interests traded on Defendant’s behalf; 

v. Controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account 

involving commodity interests; 

vi. Soliciting, receiving, or accepting any funds from any person for the 

purpose of purchasing or selling any commodity interests; 

vii. Applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except 

as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2019); 

and/or 

viii. Acting as a principal (as that term is defined in Regulation 3.1(a), 

17 C.F.R. § 3.1(a) (2019)), agent, or any other officer or employee of any 

person (as that term is defined in Section 1a(38) of the Act, 

7 U.S.C. § 1a(38) (2012)), registered, exempted from registration, or 

required to be registered with the Commission except as provided for in 

Regulation 4.14(a)(9)); 

C. An order requiring Defendant to pay civil monetary penalties of not more than the 

civil monetary penalty prescribed by Section 6c(d)(1) of the Act, 7 U.S.C. § 13aCase 1:19-cv-09052 Document 1 Filed 09/30/19 Page 30 of 33
31 

1(d)(1) (2012), as adjusted for inflation pursuant to the Federal Civil Penalties 

Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114–74, 129 Stat. 

584 (2015), title VII, Section 701, see Commission Regulation 143.8, 17 C.F.R. 

§ 143.8 (2019), for each violation of the Act or Regulations, plus post-judgment 

interest; 

D. An order directing Defendant, as well as any successors thereof, to disgorge, 

pursuant to such procedure as the Court may order, all benefits received 

including, but not limited to, trading profits, revenues, salaries, commissions, 

fees, or loans derived directly or indirectly from acts or practices which constitute 

violations of the Act and Regulations, as described herein, and pre- and postjudgment interest thereon from the date of such violations; 

E. An order directing Defendant, as well as any successors thereof, to make full 

restitution, pursuant to such procedure as the Court may order, to every customer 

and investor whose funds Defendant received, or caused another person or entity 

to receive, as a result of the acts and practices constituting violations of the Act 

and Regulations, as described herein, and pre- and post-judgment interest thereon 

from the date of such violations; 

F. An order directing Defendant, as well as any successors thereof, to rescind, 

pursuant to such procedure as the Court may order, all contracts and agreements, 

whether express or implied, entered into between, with, or among Defendant and 

any customer or investor whose funds were received by Defendant as a result of 

the acts and practices which constituted violations of the Act and the Regulations, 

as described herein; 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 31 of 33
32 

G. An order directing that Defendant, and any successors thereof, makes an 

accounting to the Court of all of their assets and liabilities, together with all funds 

he received from and paid to investors and other persons in connection with 

commodity transactions and all disbursements for any purpose whatsoever of 

funds received from commodity transactions, including salaries, commissions, 

interest, fees, loans, and other disbursement of money or property of any kind 

from at least the beginning of the Relevant Period to the date of such accounting; 

H. An order requiring Defendant and any successors thereof to pay costs and fees as 

permitted by 28 U.S.C. §§ 1920 and 2412(a)(2) (2012); and 

I. An order providing such other and further relief as the Court deems proper. 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 32 of 33
33 

VI. DEMAND FOR JURY TRIAL 

Plaintiff hereby demands a jury trial. 

Dated: September 30, 2019 

COMMODITY FUTURES TRADING 

COMMISSION 

By: S/ David Oakland 

David Oakland 

Senior Trial Attorney 

doakland@cftc.gov 

Phone: (646) 746-9700 

Lara Turcik 

Senior Trial Attorney 

lturcik@cftc.gov 

Phone: (646) 746-9700 

Peter Janowski 

Trial Attorney 

pjanowski@cftc.gov 

Phone: (646) 746-9700 

Steven Ringer 

Chief Trial Attorney 

sringer@cftc.gov 

Phone: (646) 746-9700 

Manal M. Sultan 

Deputy Director 

msultan@cftc.gov 

Phone: (646) 746-9700 

Commodity Futures Trading Commission 

Division of Enforcement 

140 Broadway, 19th Floor 

New York, NY 10005 

Phone: (646) 746-9700 

Fax: (646) 746-9940 

ATTORNEYS FOR PLAINTIFF 

COMMODITY FUTURES TRADING 

COMMISSION 

Case 1:19-cv-09052 Document 1 Filed 09/30/19 Page 33 of 33