A trader is being accused of running a bitcoin Ponzi scheme

The US government is going after a New York man for allegedly operating a bitcoin Ponzi scheme.The US Commodity Futures Trading Commission said Nicholas Gelfman, a Brooklyn resident and head trader at Gelfman Blueprint, a New York-based firm, "fraudulently solicited" $600,000 from 80 clientsin a bitcoin Ponzi scheme.Investors, according to a release from the CFTC Thursday, gave money to Gelfman "for placement in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by Defendants computer trading program called Jigsaw."In fact, as charged in the CFTC Complaint, the strategy was fake, the purported performance reports were false, andas in all Ponzi schemespayouts of supposed profits to GBI Customers in actuality consisted of other customers misappropriated funds," the CFTC said.Gelfman covered up the schemeby "staging" a hack.Since transactions on bitcoin's blockchain networkare decentralized and anonymous, the cryptocurrency provides an attractive option for criminals looking to conduct business outside of the watchful eye of government officials.The Italian mafia has used bitcointo launder money for its illicit activities, for instance, and the notorious WannaCry hackers extorted over $140,000 worth of the cryptocurrency from their malware victims.SEE ALSO:Here's why the crackdown on bitcoin in China is 'not a real problem' for the digital currencyJoin the conversation about this storyNOW WATCH: GARY SHILLING: If you don't like your job, you're 'wasting precious time
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