As reported by FinCrime Observer, Peter Kambolin, a U.S.-Russian national and CEO of Systematic Alpha Management LLC (SAM), has been sentenced to two years in prison for orchestrating a fraudulent “cherry-picking” scheme. This marks the first criminal charge against a commodities trading advisor and commodities pool operator involving cryptocurrency futures contracts. Kamoblin also received an order to forfeit approximately $1.6 million.
Details of the Scheme
Peter Kambolin, 48, from Sunny Isles Beach, Florida, utilized his position as SAM‘s owner and chief executive officer to engage in deceptive trading practices between January 2019 and November 2021. He was found guilty of misallocating profits and losses from futures trades to favor his own accounts while imposing losses on his investors. This cherry-picking scheme involved not only cryptocurrency futures contracts but also foreign exchange futures contracts.
Misrepresentation and Fraudulent Practices
Despite marketing SAM as specializing in algorithmic trading strategies focused on cryptocurrency and foreign exchange futures, Kambolin was found to have engaged in significant trading in equity index futures contracts. This misrepresentation led to the defrauding of investors both in the U.S. and internationally, depriving them of profitable trading opportunities. Kambolin used the proceeds from his fraudulent activities for personal expenses, including apartment rent, and transferred funds to foreign bank accounts controlled by his co-conspirator in Belarus and Dominica.
The Investigation and Plea
The scheme came to light following investigations by the U.S. Justice Department’s Criminal Division and the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). Kambolin pleaded guilty on October 11, 2023, to one count of conspiracy to commit commodities fraud. The sentence includes one year and six months of home confinement and an order to forfeit approximately $1.6 million.
Key Take Away
Peter Kambolin‘s sentencing highlights the ongoing efforts by regulatory and law enforcement agencies to combat fraud in the evolving digital asset market. It serves as a cautionary tale for investors and a reminder of the importance of due diligence in the increasingly complex world of financial investments.
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