Eric Pinkston, a central figure in the alleged Bitcoin Funding Team and My7Network pyramid schemes, agreed to a preliminary injunction with the Federal Trade Commission on April 20. The order came approximately one month after the FTC initiated legal action against Pinkston for his role in promoting the fraudulent operations.
The court did not equivocate in its assessment of the FTC's case. It declared the agency possessed an "ultimate likelihood of success" based on a substantial body of evidence. This included audio recordings, video evidence, website screenshots, consumer statements, declarations from investigators, and expert testimony. The court's finding indicated Pinkston likely violated Section 5(a) of the FTC Act, which prohibits unfair or deceptive acts or practices in commerce. Such a strong initial determination often signals the court's view that the defendant's conduct was clearly unlawful and likely to continue without judicial intervention, demanding immediate protective measures for the public.
Both Bitcoin Funding Team and My7Network operated as classic pyramid schemes, according to the FTC's complaint. Bitcoin Funding Team presented itself as a cryptocurrency investment opportunity, requiring participants to "donate" funds and recruit new members to earn commissions. The FTC asserts that no legitimate product or service underpinned the operation; profits flowed exclusively from new participant payments. My7Network, similarly, promised substantial returns through recruitment, masking its pyramid structure behind a veneer of digital products or memberships. These schemes thrive by exploiting the promise of quick financial gains, particularly appealing to individuals seeking alternative income streams, often resulting in significant financial losses for the majority of participants. The FTC estimates that such schemes collectively defraud consumers of hundreds of millions of dollars annually.
Under the terms of the preliminary injunction, Pinkston is now forbidden from engaging in, participating in, or assisting any other individual or entity involved in pyramid or Ponzi schemes. He also faces a strict requirement to disclose every asset he owns to the FTC. This comprehensive asset disclosure is a critical step in the agency's efforts to identify and preserve funds for potential victim restitution. The FTC's enforcement priorities consistently include protecting consumers from deceptive income opportunities, ensuring that those who promote illegal schemes are held accountable.
All disclosed assets belonging to Pinkston remain frozen. This includes any cryptocurrency holdings he may possess, which the FTC has specifically sought to secure. Freezing these assets prevents their dissipation or transfer, ensuring they are available should the court later order their forfeiture or use for compensating defrauded consumers. The FTC has increasingly targeted cryptocurrency assets in its enforcement actions, recognizing their potential use in concealing illicit gains and complicating recovery efforts.
Pinkston's preliminary injunction mirrors similar orders already issued against his co-defendants, Scott Chandler, Louis Gatto, and Thomas Dluca. All four individuals are alleged to have played significant roles in the promotion and operation of the fraudulent enterprises, acting as key recruiters and beneficiaries. However, Pinkston secured a minor concession in the agreement. An Agreed Motion to Release Funds, also filed April 20, permits him to access $2,322 from a Citizens Bank & Trust account. This amount was designated for "necessary living expenses," a common allowance in asset freeze cases designed to cover basic needs during ongoing litigation, though it stands in stark contrast to the millions potentially lost by victims.
Co-defendant Thomas Dluca filed his answer to the FTC's complaint on April 19. Louis Gatto, on the same day, submitted a Motion to Dismiss for Failure to State a Claim. Such motions are rarely successful in cases alleging multi-level marketing or Ponzi scheme fraud. Defendants typically argue the regulator has not provided sufficient specific allegations, a claim often countered by the extensive detail found in FTC complaints and the broad scope of consumer protection laws.
Gatto's motion faces a particularly steep challenge. The court has already determined the FTC will likely prevail on the merits of its case. It becomes difficult to argue a lack of stated claim when the presiding judge has essentially previewed the probable outcome. The judicial system prioritizes preventing ongoing consumer harm, and preliminary injunctions are a powerful tool in that effort. The FTC's legal team must now prepare for the next phases of discovery and potential motions for summary judgment or trial, aiming to secure permanent injunctions and monetary judgments against all defendants. The agency continues its work to distinguish legitimate multi-level marketing businesses, which rely on retail sales, from illegal pyramid schemes, which depend on recruitment fees.
The ultimate goal of the FTC's litigation against Pinkston and his co-defendants remains the full recovery and return of funds to consumers defrauded by the Bitcoin Funding Team and My7Network operations.