The defendants allegedly disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors.
The Securities and Exchange Commission has obtained an asset freeze against Miami-based investment adviser BKCoin Management LLC and one of its principals, Kevin Kang, in connection with a $100 million crypto fraud.
Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said: “As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct. This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.”
Approximately $100 million from at least 55 investors
According to the complaint, from at least October 2018 through September 2022, BKCoin raised approximately $100 million from at least 55 investors to invest in crypto assets, but BKCoin and Kang instead used some of the money to make Ponzi-like payments and for personal use.
The defendants allegedly disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors.
Kevin Kang also misappropriated at least $371,000 of investor money to, among other things, pay for vacations, sporting events tickets, and a New York City apartment, the SEC stated.
BKCoin’s principal then attempted to conceal the unauthorized use of investor money by providing altered documents with inflated bank account balances to the third-party administrator for certain of the funds, the financial watchdog alleges, adding that the firm claimed it received an audit opinion from a “top four auditor”, when in fact no audit opinion was made.
CoinDeal sued for $45 milion crypto scam
The SEC has recently sued several individuals involved in crypto scam CoinDeal, which raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.
Defendants claimed that investors could generate extravagant returns by investing in CoinDeal, a blockchain technology that would be sold for trillions of dollars to a group of prominent and wealthy buyers.
However, the sale of CoinDeal never occurred and no distributions were made to CoinDeal investors, the SEC stated, adding that the defendants collectively misappropriated millions of dollars of investor funds for personal use.
SEC charged Trade Coin Club for $295 million Ponzi scheme
In late 2022, the SEC announced charges against famous fraudulent crypto Ponzi scheme, Trade Coin Club, a “multi-level marketing program” that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot.
Trade Coin Club raised more than 82,000 bitcoin – valued at $295 million at the time – from more than 100,000 investors worldwide. Defendants Douver Torres Braga and Joff Paradise told investors the bot made “millions of microtransactions” every second, and that investors would receive minimum returns of 0.35 percent daily.
According to the SEC, however, Douver Torres Braga siphoned off investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters, including defendants Paradise, Taylor, and Tetreault. Operating as a Ponzi scheme, investor withdrawals came entirely from deposits made by investors, not from any crypto asset trading activity by a bot or otherwise, the SEC claims, further alleging the overall amounts received by each of the defendants:
