SAM CEO Kambolin Jailed in Crypto Fraud Case

The CEO of a well-known investment business has been sentenced to two years in jail for arranging a complex “cherry-picking” fraud operation. This is the first criminal prosecution against a commodities trading adviser and operator for deception using bitcoin futures contracts.

Peter Kambolin, 48, a dual U.S.-Russian citizen from Sunny Isles Beach, Florida, and the president of Systematic Alpha Management LLC (SAM), was sentenced to prison for defrauding investors and manipulating futures contracts for personal benefit. SAM, which was founded in 2007, was a well-known business by 2011, managing assets of over $720 million. However, between January 2019 and November 2021, Kambolin used his position as a commodities trading adviser and pool operator to participate in a cherry-picking scam, fraudulently allocating lucrative transactions to his accounts while leaving investors with losses.

According to court filings, Kambolin misrepresented SAM's trading methods, claiming a concentration on cryptocurrencies and foreign exchange futures even though almost half of the trading included equities index futures contracts. This deceit not only deceived US and foreign investors but also prevented them from participating in successful deals.

Kambolin funneled the proceeds from this scheme into personal expenses and transferred funds to foreign bank accounts controlled by his accomplices in Belarus and Dominica.

The fraudulent activities included executing trades for pool participants alongside Kambolin's proprietary accounts, with profits and losses unfairly distributed to benefit his financial interests.

On October 11, 2023, Kambolin pleaded guilty to one count of conspiracy to conduct commodities fraud. This significant verdict, announced by Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department's Criminal Division and Assistant Inspector General for Investigations Shimon R. Richmond of the FDIC Office of Inspector General (FDIC-OIG), highlights the gravity of the crime.

This case, investigated by the FDIC-OIG and prosecuted by Trial Attorney Matt Kahn of the Criminal Division's Fraud Section, marks a watershed moment in the continuing attempts to regulate and assure fairness in the volatile and developing markets of cryptocurrency and futures trading. The Commodity Futures Trading Commission already filed a lawsuit against Kambolin and SAM, highlighting the seriousness of their actions.

This decision serves as a stark reminder of the legal consequences of fraudulent trading actions, and it sets a precedent in the financial industry, particularly in the fields of cryptocurrencies and futures trading. It highlights the US government's commitment to safeguarding market integrity and protecting investors from deceptive and illegal practices.

This lawsuit is an important wake-up call for investors and financial market participants to be cautious and do due diligence when interacting with trading advisors and investment companies. The judicial system's quick reaction in this instance highlights the importance of ethical conduct and accountability in the financial business.

In conclusion, Peter Kambolin's conviction marks a significant step forward in the fight against financial crime, particularly in cryptocurrency and futures trading. It underscores the need for transparency and honesty in financial dealings and serves as a deterrent to future fraudulent behavior. As financial markets evolve, this case demonstrates the US government's relentless pursuit of justice to preserve a fair and trustworthy trading environment for all participants.

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