The Armed Raid That Started It All — And the Criminal Charges That Never Came

At 6:00 a.m. on May 16, 2022, armed federal agents and U.S. Marshals arrived at my home in Portland, Oregon. They had a search warrant. They had weapons. What they did not have — as the CFTC's own lead investigator would later admit under oath — was any review of the blockchain.

The raid was the opening act of CFTC v. Sam Ikkurty, Case No. 1:22-cv-02465 (N.D. Ill.). Within days, the CFTC had obtained a Temporary Restraining Order freezing all of my assets — an ex parte order issued in an eleven-minute hearing at which I was not present and had no opportunity to respond. The CFTC's press release called it a "Ponzi scheme." The word "Ponzi" appeared in headlines across the country.

Here is what those headlines did not mention: the Department of Justice reviewed this case and declined to bring criminal charges.

That declination matters enormously. Federal prosecutors have the same access to evidence that the CFTC has. They reviewed the facts, the transactions, the fund records. They concluded that the conduct did not rise to the level of criminal fraud. The standard for criminal fraud — beyond a reasonable doubt — is higher than the civil preponderance standard. But the direction of the DOJ's conclusion is telling: the agency with the most powerful investigative tools in the federal government looked at this case and walked away.

The CFTC did not walk away. It pressed forward with a civil enforcement action, obtained a $209 million judgment, and has maintained a complete asset freeze for nearly four years. The 69 limited partners who invested in Rose City Income Fund received $29.3 million on a $5.9 million investment — a 397% return. Not one investor filed a complaint. Not one investor lost money. Thirty-two of them filed formal objections with the court, asking the proceedings to stop.

The CFTC's own expert witness — retained and paid by the agency — testified that the fund was not a Ponzi scheme.

The lead investigator, Heather Dasso, admitted under oath on September 5, 2023 that she never reviewed the blockchain. In a case built entirely on the theory that digital asset transactions were fraudulent, the investigator who built the case never examined the primary evidence.

The armed raid, the asset freeze, the $209 million judgment, the four years of litigation — all of it rests on an investigation that, by the investigator's own sworn admission, never looked at the blockchain.

The Seventh Circuit is now reviewing this case on appeal, No. 24-2684. The questions before the court include whether the CFTC had jurisdiction over digital assets at all, and whether the constitutional rights of the defendant were violated by the manner in which the enforcement action was conducted.

The DOJ said no to criminal charges. The CFTC said yes to a $209 million civil judgment. The Seventh Circuit will have the final word.

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Key Facts

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Case No. 1:22-cv-02465 (N.D. Ill.) | 7th Cir. Appeal No. 24-2684 | CFTC Press Release 8532-22

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