U.S. Commodity Futures Trading Commission v. Giri, et al., was filed in the United States District Court for the Southern District of Ohio on August 11, 2022, claiming violations of several provisions of the Commodity Exchange Act and Commission Regulations. Specifically, the U.S. Commodity Futures Trading Commission (“CFTC”) seeks permanent injunctive relief against all Defendants, disgorgement, rescission, and civil penalties.
The CFTC brought this action against Rathnakishore Giri (“Giri”), SR Private Equity, LLC (“SR Private Equity”), NBD Eidetic Capital, LLC (“NBD Eidetic”), Giri Subramani (“Subramani”), and Loka Pavani Giri (“Pavani Giri”) (collectively, “Defendants”) who are alleged to have engaged in a fraudulent scheme to trade digital assets—mainly bitcoin—on behalf of investors. Defendant Giri is a controlling person of both Defendants NBD Eidetic, an Ohio limited liability company, and SR Private Equity, an Ohio limited liability company. Defendants Subramani and Pavani Giri are the parents of Defendant Giri.
The complaint alleges that starting in or around March 2019, Defendant Giri solicited customers in-person through meetings, events, and a networking conference and by word of mouth, emails, texts, and telephone calls to invest in and trade digital assets. The complaint alleges Giri falsely represented that he would obtain guaranteed returns for investors averaging up to 5% to 10% per month.
Around October 2020 and April 2021, Defendant Giri established Defendants NBD Eidetic and SR Private Equity respectively to solicit customers to invest in various digital asset investment funds purportedly operated through the two companies. In addition to promising guaranteed rates of return up to 5% to 10% per month, Defendant Giri mispresented to investors that they were guaranteed not to lose their initial investment and that investments were “safe, and customers were able to withdraw their invested funds and profits at any time.”
The complaint alleges Defendant Giri solicited and accepted over $12,000,000 and at least 10 bitcoin from more than 150 individuals or entities. The customer funds transferred to Defendants Giri, NBD Eidetic, and SR Private Equity to invest in digital assets were alleged to have instead been comingled and pooled with other customer funds, individual Defendants’ personal bank accounts, and personal digital asset trading accounts.
Defendant Giri allegedly only transferred a portion of customer funds to digital asset trading accounts, never established any digital asset trading account in the name of any investment fund, and primarily engaged in trading digital assets through an international digital currency platform that does not allow U.S. customers. Defendants allegedly misappropriated investors’ funds to pay for Defendant Giri’s lavish lifestyle and to pay purported profits to earlier investors in a manner akin to a Ponzi scheme.
The complaint asserts claims for violation of (i) Section 6(c)(1) of the Commodity Exchange Act, (ii) U.S.C. § 9(1), (iii) CFTC Regulation 180.1(a), (iv) 17 C.F.R. § 180.1(a), and (v) disgorgement, and seeks permanent injunctive relief, rescission, and civil penalties.