CFTC Charges Suspected Bitcoin Seller and Ex-Lawyer With Multi-Million Dollar Bitcoin Fraud, Imposes Over $5 Million in Restitution

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Washington, DC The Commodity Futures Trading Commission today issued two orders filing and settling concurrent charges against Randy Craig Levine, formerly of Coral Gables, Florida, and Philip Reichenthal of Homestead, Florida, for perpetrating a bitcoin fraud from several million dollars.

The orders charge Levine and Reichenthal with engaging in a deceptive and fraudulent scheme in which they knowingly or recklessly made false statements to investors inducing them to send more than $5 million to Reichenthal to buy bitcoin from Levine. After receiving the funds from the investors, Reichenthal and Levine failed to deliver the bitcoin as promised and did not return the funds from the investors.

In the orders, the CFTC imposes full restitution on the victims of the fraud and permanent trade and registration bans against Levine and Reichenthal.

The Commission continues to devote substantial attention and resources to rooting out fraud in the digital asset space, said chief enforcement officer Ian McGinley. The conduct in this case is particularly reprehensible because one of the fraudsters was a lawyer who should have known better but instead took advantage of his title. We seek to hold accountable all fraudsters in our marketplaces, but especially those who abuse their position of trust.

Background to the case

The orders reveal that in or around 2018, Levine and Reichenthal instigated two separate groups of investors to send Reichenthal a combined total of over $5.3 million to buy bitcoin from Levine. Reichenthal used his position as a licensed attorney to pose as an escrow agent for the contemplated transactions, and investors were promised that Reichenthal would hold their funds in his escrow attorney trust accounts until investors received the bitcoin they expected to buy from Levine. Reichenthal and Levine knew these depictions were false. After Reichenthal received the funds from the investors, he transferred the funds to accounts controlled by Levine and no bitcoins were delivered to the investors. In truth, Reichenthal and Levine never intended to deliver bitcoin to investors and did not return investor funds as promised when no bitcoin was delivered.

The CFTC warns that orders requiring the return of funds to victims may not result in the recovery of lost money because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for customer protection and to ensure that wrongdoers are held accountable.

Related criminal action

In a related criminal action, U.S. District Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York found guilty a plea by Reichenthal on February 11, 2022, and Levine on November 9, 2022. [See United States v. Levine and Reichenthal, No. 20 Cr. 578.] The court sentenced Reichenthal and Levine on November 28, 2022 and March 21, 2023, respectively. The court sentenced Levine to 70 months in prison and Reichenthal to time served and forfeiture commensurate with the amount of restitution in the CFTC orders.

The CFTC appreciates the assistance of the United States Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and Mexico’s Comisin Nacional Bancaria y de Valores for their assistance in this case.

The Law Enforcement Division personnel responsible for this case are Lara Turcik, David Oakland, Peter Janowski, Steven Ringer, Lenel Hickson, Jr. and Manal M. Sultan.

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