Release Number 8743-23
CFTC Charges Alleged Bitcoin Seller and Former Attorney with Multi-Million Dollar Bitcoin Fraud, Imposes Over $5 Million in Restitution
July 06, 2023
Washington, D.C. — The Commodity Futures Trading Commission today issued two orders simultaneously filing and settling charges against Randy Craig Levine, formerly of Coral Gables, Florida, and Philip Reichenthal of Homestead, Florida, for perpetrating a multi-million dollar bitcoin fraud.
The orders charge Levine and Reichenthal with engaging in a deceptive and fraudulent scheme where they knowingly or recklessly made false representations to investors inducing them to send over $5 million to Reichenthal to buy bitcoin from Levine. After receiving the investors’ funds, Reichenthal and Levine failed to deliver the bitcoin as promised and failed to return the investors’ funds.
In the orders, the CFTC imposes full restitution for the victims of the fraud and permanent trading and registration bans against Levine and Reichenthal.
“The Commission continues to devote substantial attention and resources to rooting out fraud in the digital assets space,” said Director of Enforcement Ian McGinley. “The conduct in this case is particularly reprehensible because one of the fraudsters was an attorney who should have known better, but instead took advantage of his title. We seek to hold accountable all fraudsters in our markets, but especially those who abuse their positions of trust.”
The orders find that, in or about 2018, Levine and Reichenthal induced two separate groups of investors to send Reichenthal a combined total of over $5.3 million to buy bitcoin from Levine. Reichenthal used his position as a licensed attorney to pose as an escrow agent for the contemplated transactions, and investors were promised that Reichenthal would hold their funds in his attorney trust accounts in escrow until the investors received the bitcoin they were expecting to purchase from Levine. Reichenthal and Levine knew these representations were false. After Reichenthal received the investors’ funds, he transferred the funds to accounts controlled by Levine and no bitcoin was delivered to investors. In truth, Reichenthal and Levine never intended for the bitcoin to be delivered to the investors and failed to return the investors’ funds as promised when no bitcoin was delivered.
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
Related Criminal Action
In a related criminal action, U.S. District Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York accepted guilty a plea from Reichenthal, on February 11, 2022, and Levine on November 9, 2022. [See United States v. Levine and Reichenthal, No. 20 Cr. 578.] The court sentenced Reichenthal and Levine on November 28, 2022 and March 21, 2023, respectively. The court sentenced Levine to 70 months in prison and Reichenthal to time served, and forfeiture commensurate with the amount of restitution in the CFTC’s orders.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Mexico Comisión Nacional Bancaria y de Valores for their assistance in this matter.
The Division of Enforcement staff responsible for this matter are Lara Turcik, David Oakland, Peter Janowski, Steven Ringer, Lenel Hickson, Jr., and Manal M. Sultan.