The former CEO of Systematic Alpha Management, a Miami-based investment firm, has admitted to a conspiracy involving commodities fraud linked to crypto futures contracts. He now faces a potential five-year prison sentence.
On October 12, the United States Department of Justice revealed that Peter Kambolin, the former CEO of Systematic Alpha Management (SAM) LLC, has pleaded guilty to a conspiracy to commit commodities fraud related to crypto futures contracts. This admission could lead to a five-year prison sentence for Kambolin.
Kambolin was involved in what is referred to as a “cherry-picking” scheme. He marketed his firm as offering algorithmic trading strategies involving futures contracts, encompassing cryptocurrencies and commodities. However, he misrepresented to investors that his fund dealt with cryptocurrency and foreign exchange futures, when, in reality, almost half of his trading in each pool involved equity index futures contracts.
This fraudulent practice, known as cherry-picking, involves executing trades without assigning them to a specific trading account until the trader determines whether the trade has been profitable or incurred losses.
Kambolin not only defrauded investors in the United States and abroad by depriving them of profitable trades but also used the proceeds to fund his personal expenses, including a beachfront apartment’s rent. The scheme’s proceeds were transferred to foreign bank accounts controlled by a co-conspirator in Belarus and Dominica.
Kambolin faces a maximum five-year prison term following his guilty plea, with his sentencing date to be determined in the future.