CEO Pleads Guilty in Crypto Futures Fraud Case

The former CEO of a Miami-based investment firm pleads guilty to a commodities fraud conspiracy involving crypto futures contracts and faces up to five years in prison.

The United States Department of Justice stated in a statement released on October 12 that Peter Kambolin, the former CEO of Systematic Alpha Management (SAM) LLC, operated a “cherry picking” scheme in which he promoted his firm as offering algorithmic trading strategies involving futures contracts, including cryptocurrencies and commodities.

In reality, approximately half of Kambolin’s trading in each pool involved equity index futures contracts.

Prosecutors wrote, “In doing so, Kambolin defrauded investors in the United States and abroad by, among other things, denying them profitable trades.”

Cherry picking is a fraudulent securities trading practice in which a trader executes trades without designating them to a specific trading account until he or she has determined whether the trade was profitable or not.

According to the Department of Justice, Kambolin defrauded investors in the United States and abroad by depriving them of profitable trades and using the proceeds to finance his expenditures, including the rent for a beachfront apartment.

The proceeds of his conspiracy were transferred to foreign bank accounts in Belarus and Dominica that were controlled by a co-conspirator.

“Yesterday’s guilty plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme and using the proceeds from the scheme to fund his lifestyle,” said Assistant Inspector General for Investigations Shimon Richmond.

In light of his guilty plea, Kambolin now faces a maximum prison term of five years. His sentencing hearing will take place at an unspecified future date.