Quick Take
- CEO Peter Kambolin pleaded guilty to conspiracy to commit commodities fraud and faces a possible five years in prison.
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A former chief executive pleaded guilty on Thursday after prosecutors said he engaged in a “cherry-picking scheme” involving crypto futures contracts.
The Justice Department called the charges a first of its kind in a case against Peter Kambolin, owner and CEO of Systematic Alpha Management LLC. Kambolin, 48, ran the firm, which prosecutors say was marketed as offering algorithmic trading strategies involving futures contracts.
Prosecutors say Kambolin engaged in the “cherry-picking scheme” between January 2019 and November 2021, when he “fraudulently allocated profits and losses from futures trades” in order to “benefit his own accounts unfairly at the expense of his clients.” So-called “cherry-picking” refers to when an individual executes trades without assigning those trades to a certain account until the individual determines whether the trade has become profitable or suffered losses.
Beachfronts and fraud
Kambolin defrauded investors in the U.S. and abroad by depriving them of profitable trades and using proceeds to pay for personal expenses such as rent for a beachfront apartment. He transfered funds to foreign accounts controlled in Belarus and Dominica, the Justice Department said.
Kambolin pleaded guilty to conspiracy to commit commodities fraud and faces a possible five years in prison.
“Yesterday’s plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme, and using proceeds from the scheme to fund his own personal lifestyle,” FDIC-OIG assistant Inspector General for Investigations Shimon R. Richmond said in a statement.
