Jersey Resident Loses Over $1.5 Million in Bitcoin Scam

A cryptocurrency investor has reportedly lost his life-savings after falling for a scam involving Bitcoin (BTC), the world’s most dominant cryptocurrency. The victim, who’s a resident of Jersey, an autonomous region and monarchy affiliated with (but not part of) the UK, was targeted by scammers who allegedly stole £1.2 million (appr. $1.58 million) from him.

Scammers Target Victim Over 18-Month Period

This, according to local news outlet the Jersey Evening Post, which noted that the fraudsters targeted the Jersey resident over an 18-month period. During this period, the victim was reportedly told he would receive as much as a 15x return on his initial investment.

As detailed by local news sources, the victim was first approached by the scammers when he visited a fraudulent Bitcoin-related website (created by the criminals). The unsuspecting investor lost all of his savings as he was reportedly misled into believing that he would earn large returns on his investments.

“Unlikely” Funds Will Be Recovered

After the Jersey resident handed over £1.2 million to the criminals, he never received the returns he was promised. According to the UK’s National Crime Agency, it is now highly unlikely the victim will be able to recover the funds he lost. Moreover, the gang responsible for the financial crime had claimed to be based in Norway.

However, authorities investigating the matter said they were able to track various transactions the offenders conducted between bank accounts in several different countries. In order to warn the residents of the region, the Jersey Fraud Prevention Forum has recommended they remain “extra vigilant.”

“Well-Known UK Company Names Used” To Mislead Victim

Other details from the incident report revealed the scammers contacted the victim through email and telephone, right after the Jersey resident visited their crypto-related website. A representative at the Jersey Financial Services Commission confirmed:

The victim was engaged for over an 18-month period and they were able to build trust prior to getting the victim to send the greater amounts.

The representative added: 

[The victim was] made to believe that the returns would be 15 times the investment amount and the criminals were using well-known UK company names to convince them. The requests for further funds were allegedly in relation to taxes and fees which were imposed in the foreign jurisdictions where the original monies were sent.

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

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