The Federal Trade Commission (FTC) is suing a startup for spending its raised funds on bitcoins () and credit card bills, rather than the stated products, the court filing on May 6.
The FTC brought a lawsuit before the U.S. District Court for the Southern District of Texas alleging that the startup dubbed iBackPack and its officer and authorized signatory Douglas Monahan misused a “large share” of $800,000 raised during four crowdfunding campaigns from consumers.
Specifically, the defendants allegedly did not use the funds for development, production and distribution of the stated products such as backpacks, but purchased bitcoins, made automated teller machines () withdrawals and paid off personal credit cards.
The FTC states in the filing that the defendants violated the FTC Act, that prohibits “unfair or deceptive acts or practices in or affecting commerce.” The court may therefore award ancillary relief, including rescission or reformation of contracts, restitution, refunds, and the disgorgement of ill-gotten funds.
Last month, the Manhattan district attorney Cyrus R. Vance, Jr. a group of individuals who allegedly operated stores on the dark web that sold and shipped “hundreds of thousands” of tablets of counterfeit and laundered millions of dollars with . The individuals reportedly withdrew more than $1 million using ATMs.
Also in April, Cointelegraph that LocalBitcoins trader Jacob Burrell Campos, who sold to more than 1,000 people in the U.S., will serve two years in federal jail. Burrell, a citizen, amassed more than $820,000 from sales on the P2P platform between 2015 and 2018.
Published at Tue, 07 May 2019 20:28:38 +0000
