Release Number 8381-21
CFTC Orders Florida Man and His Company to Pay Over $397,000 in Connection with a Digital Assets Solicitation Scheme
April 20, 2021
Washington, D.C. — The Commodity Futures Trading Commission announced today that it has issued an order filing and settling charges against Jozef Gherman of Florida and J Squared LLC, a Florida limited liability company, for making misleading statements or omitting material facts in connection with soliciting more than $300,000 from over 40 individuals to invest in digital assets. Gherman was an employee and one of the founders of J Squared and was its principal owner and CEO.
The order requires Gherman and J Squared to pay a $150,000 civil monetary penalty, with the amount to be paid by each capped at $75,000, and any post-judgment interest. The order also requires Gherman and J Squared to pay $247,110 in restitution, with the amount to be paid by each capped at $123,555, and any post-judgment interest. In addition, the order imposes a 10-year ban on Gherman and J Squared from trading on or subject to the rules of any CFTC-registered entity, and from engaging in any activities requiring registration with the CFTC.
“The CFTC will continue to work to protect participants from false and misleading solicitation practices and hold those engaging in such practices, including individuals, accountable,” said Acting Director of Enforcement Vincent McGonagle.
According to the order, from at least June 2017 through at least June 2018, Gherman and J Squared solicited and accepted funds in the form of digital currency and fiat cash from over 40 customers to trade virtual currencies, including Bitcoin, Bitcoin Cash, Ether and other alternative coins.
They recklessly made false and misleading statements of material fact or omitted to state material facts which induced individuals to invest with J Squared, invest additional funds with J Squared, or continue to hold their investments with J Squared. They also made misleading statements regarding J Squared’s growth and success as a company, its expanding clientele, and its ability to be selective in acquiring customers. Furthermore, Gherman and J Squared recklessly made materially false and misleading statements and omissions regarding the likelihood of profit and the risk of loss. Customers suffered losses totaling over $247,000.
The CFTC cautions victims that restitution orders may not always result in the recovery of money lost, because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.
The Division of Enforcement staff members responsible for this case are Patrick Daly, Trevor Kokal, Christopher Giglio, Yusuf Capar, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan.