US FTC Settles With Alleged Crypto Pyramid Scheme for $500,000

The United States Federal Trade Commission has settled charges it filed in 2018 against an alleged crypto pyramid scheme involving four individuals.

In March 2018, the FTC first obtained a court order against Thomas Dluca, Eric Pinkston, Louis Gatto and Scott Chandler that stopped their misleading marketing practices and froze their assets.

At the time, the FTC stipulated that the individuals violated the FTC Act by "Advertising, marketing, and promotion of purported money-making schemes."

The programs represented chain referral schemes, requiring members to constantly recruit new participants to generate revenue, the FTC noted.

Eventually, most participants failed to reimburse their initial investments, the FTC stated.

As part of the proposed settlement, Dluca will pay $453,932, and Chandler will pay $31,000.

Pinkston also agreed to a $461,035 judgment, which will be suspended upon payment of $29,491, due to his inability to pay the full amount.

If he is later found to have misrepresented his finances, he will be required to pay the full amount.

The FTC filed the proposed order in the U.S. District Court for the Southern District of Florida.

Earlier this year, the FTC sued startup iBackPack for misusing raised funds of the amount of $800,000 during four crowdfunding campaigns from consumers.