SEC sues BKCoin for alleged fraud
The Securities and Exchange Commission (SEC) continues its enforcement efforts against the crypto industry, archiving an emergency action against Miami-based crypto hedge fund BKCoin and its principal Kevin Kang.
According to the SEC’s complaint, the hedge fund, launched in 2018 by co-founders Carlos Betancourt and Kevin Kang, raised $100 million from more than 55 investors to invest in crypto assets, which its principal Kevin Kang used to “make Ponzi-like payments and for personal use .” Eric Bustillo, director of the SEC’s Miami regional office, said:
As we allege, investors entrusted their money to the defendants to trade crypto-assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like behavior.
Has BKCoin pulled off the industry’s biggest scam?
The SEC’s filing against the Miami-based crypto hedge fund alleges that BKCoin and its principal, Keving Kang, “violated” the anti-fraud provisions of the federal securities laws. According to the SEC filing, BKCoin and Kang guaranteed investors that the money would be used to trade cryptoassets and produce additional profits for BKCoin through their separate managed accounts and five private funds.
In addition, Kang and BKCoin allegedly spent more than $3.6 million to make “Ponzi-like” payments to fund investors. In this regard, the SEC alleges that Kang “misappropriated” more than $371,000 of investor funds to pay for vacations, tickets to sporting events and an apartment in New York City.
According to the SEC’s complaint, Kevin Kang altered investors’ documents with “inflated” bank account balances to the third-party administrator for some of the capital they had raised since the crypto hedge fund’s launch.
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The complaint also accuses BKCoin of misrepresenting to its investors that the crypto hedge fund or any of the four funds had received an audit report from a “top four” auditor when, according to the SEC, none of the funds received an audit report, at any time. between 2018 and 2022.
According to the filing, the SEC’s enforcement action seeks “permanent injunctions” against BKCoin and Kevin Kang, disgorgement, prejudgment interest and a civil penalty against both parties. Eric Bustillo concluded:
This action highlights our continued commitment to protecting investors and eradicating fraud in all securities sectors, including the cryptoasset arena.
BKCoin co-founder Kevin Kang was previously fired by BKCoin’s core legal entity, BKCoin Management LLC, on Oct. 8 for allegedly misappropriating $12 million in assets from three multi-strategy funds, according to an Oct. 28 archiving by the legal entity BKCoin for Miami-Dade County in the state of Florida.
The global cryptocurrency market capitalization currently stands at $985.9 billion, still below the trillions of dollars lost since last week’s Silvergate feud. Today, BTC’s market cap is $432 billion, and dominates 40.36% of the sector.
On the other hand, stablecoins have a market capitalization of $136 billion, with a share of 12.7% of the total crypto market capitalization.
Featured image from Unsplash, chart from TradingView.com
