Release Number 8803-23
CFTC Charges Trading Firm, CEO, and COO with $5 Million Forex Commodity Pool Scheme
Complaint Alleges Defendants Falsely Claimed to Use AI-Based Trading Algorithms to Recover Losses
October 06, 2023
Washington, D.C. — The Commodity Futures Trading Commission today announced it filed a civil complaint in the U.S. District Court for the Eastern District of New York against Technical Trading Team, LLC (TTT), its Chief Executive Officer Edwin Carrion, formerly of Pinecrest, Florida, and its Chief Operating Officer and head trader Jason Rodriguez, of Bellerose, New York, charging them with fraudulently soliciting over $5 million for participation in a foreign currency (forex) commodity pool scheme.
The complaint charges TTT, Carrion, and Rodriguez, directly and/or derivatively, with fraud in connection with retail forex transactions, fraud in connection with being a commodity pool operator (CPO) and associated persons (AP) of a CPO, and failure to register as a CPO and as APs of a CPO.
The complaint alleges the defendants made false and misleading statements regarding their investment track record and the safety of investing in the TTT pool to participants and potential participants. After losing over $3 million by trading retail forex on a leveraged basis, the defendants falsely assured pool participants they could recoup the losses using artificial intelligence-based (AI) trading algorithms.
In the complaint, the CFTC seeks a civil monetary penalty, full restitution to defrauded pool participants, disgorgement of ill-gotten gains, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act (CEA) and CFTC regulations as charged.
“As alleged, the defendants made false and misleading statements and promises about the safety and profitability of becoming a pool participant in the TTT commodity pool,” said Director of Enforcement Ian McGinley. “As a result of entrusting their money to TTT in light of these false promises, pool participants lost millions of dollars. Today’s filing once again demonstrates how the CFTC will hold fraudsters in our markets accountable for their wrongdoing, whether utilizing traditional technical trading techniques or emerging technologies, such as artificial intelligence or machine learning.”
The complaint alleges that from approximately January 2020 to the present, Carrion and Rodriguez solicited people who were not eligible contract participants to participate in a commodity pool operated by TTT that would trade retail forex on margin. Pool participants’ investments were structured as loans in which participants were promised they would receive annual interest of 18% to 24%, paid monthly, for a period of one year, and their principal investments would be returned at maturity.
To induce people to invest in the TTT commodity pool, Carrion and Rodriguez exaggerated the extent and quality of their track record trading forex; promised pool participants they would maintain a reserve fund equal to the size of participants’ contributions; promised pool participants they would risk no more than 1% of the pool’s assets in any trade and not hold trades open overnight; and misrepresented the scope of the assets that would serve as collateral for the participants’ contributions to the TTT commodity pool. According to the complaint, each of these representations was false or misleading.
According to the complaint, the defendants solicited approximately $5 million from 27 pool participants. The defendants lost over $3.13 million trading forex on a leveraged basis, misappropriated funds for personal use, and used new participants’ funds to pay interest to existing participants. After losing millions trading forex and defaulting on the purported loans, the defendants concealed their fraudulent activity by claiming they would recoup losses and repay the loans by creating a “bot” that used AI to manage trading.
The complaint further charges that TTT acted as a CPO without being registered with the CFTC as required, and that Carrion and Rodriguez acted as associated persons of a CPO, likewise without being registered with the CFTC as required. The defendants are also alleged to have made false statements to a registered foreign exchange dealer regarding the source of TTT’s funds and that TTT did not engage in business activities which would require TTT’s registration.
The CFTC cautions victims that restitution orders may not result in the recovery of 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.
The CFTC appreciates the assistance of the Belize Financial Services Commission.
The Division of Enforcement staff responsible for this matter are Peter Janowski, Diana Wang, Trevor Kokal, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan. The Division of Enforcement’s Cybersecurity and Emerging Technologies Task Force also assisted in this matter.
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CFTC’s Forex Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which alerts customers to forex fraud and lists simple ways to spot forex scams.
The CFTC also strongly urges the public to verify an individual or company’s registration with the CFTC before committing funds. Customers should be wary of providing funds to an unregistered individual or entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office.
Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.