In a note published this Monday afternoon (6), the US Securities and Exchange Commission, the SEC, registered an emergency action to freeze the assets of a cryptocurrency company.
According to the US agency, the company orchestrated its fraudulent operation between October 2018 and September 2022. During that period, the scammers allegedly raised about US$ 100 million (R$ 520 million) from at least 55 investors.
However, such a lawsuit differs from other SEC actions. After all, it wouldn’t just be about collateral, it would also be about a Ponzi scheme.
SEC Alleges Crypto Company Lied About Fund Control, Founder Used Money For Self Benefit
In the note published this Monday (6), the SEC alleges that the company used BKCoin US$3.6 million (R$18.6 million) to make payments to its investors in a Ponzi scheme. That is, without generating a profit, the company used new revenue to pay old investors.
The lawsuit only mentions the name of Kevin Kang, who is believed to be one of the company’s directors. As a highlight, the agency points out, the director used the company’s funds to pay for his lavish life.
“The complaint also alleges that Kang embezzled at least $371,000 (R$1.9 million) in investor money to, among other things, [viagens de] vacation, tickets to sporting events and an apartment in New York.”
“As we claim, investors entrusted their money to the defendants to trade crypto assets. Instead, the defendants embezzled his money, created false documents and even engaged in Ponzi-like behavior.”Eric I. Bustillo of the SEC. “This action underscores our ongoing commitment to protecting investors and eradicating fraud across all securities industries, including the crypto asset arena.”
According to the note, Kevin Kang and BKCoin “violated federal securities laws.” While the agency says it has frozen the company’s assets, the amounts have not been disclosed.
Another point raised in the SEC’s complaint is that the company lied to its investors by claiming that its books were audited by one of the top four accounting firms, something that was never alleged to have happened.
Finally, the SEC points out that a company called Bison Digital LLC allegedly received US$12 million (R$62 million) from BKCoin and this move is also under investigation.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
