SEC files complaint against BKCoin and co-founder for alleged $100 million fraud
Many crypto investors have lost their money in scams like BKCoin. For example, Bitcoinist reported that the DeFi sector recorded a whopping $678 million to hackers in the second quarter of 2022, confirming the risk inherent in the industry.
Surprisingly, these scams sometimes come in an official package, tricking investors into thinking they are legitimate. As alleged by the US Securities and Exchange Commission, a recent scam package is an offering by BKCoin and its co-founder. The commission has filed emergency proceedings against the financial advisory firm for defrauding investors.
BKCoin and co-founder Stole $100 million, says SEC
The SEC filed a complaint alleging that the defendants stole $100 million through a bogus crypto scam. The SEC shared one press release claimed that the defendants defrauded 55 investors between October 2018 and September 2022.
The company and its co-founder Kevin Kang had told investors that they would use their funds to trade cryptoassets, thereby earning them huge returns on their investments. The defendants even lied to the investors that they had received an audit opinion from a top-four auditor.
But instead of trading crypto with investors’ funds, the defendants used $3.6 million to pay out others in the usual Ponzi scheme. By then, Kang allegedly spent more than $370,000 on his interest, such as paying for vacations, buying a property in New York City and paying for tickets to sporting events.
After filing the emergency action, the commission froze some of the assets under BKCoin, alleging that the defendants violated federal securities fraud laws. It also seeks a permanent injunction against the duo and disgorgement from Bison Digital LLC for receiving $12 million from BKCoin.
Remarkable breakdown of fraudsters
Aside from BKCoin and its co-founder, the SEC has taken regulatory action against other fraudsters operating in the industry. One notable incident was a case involving CoinDeal, another fraudulent crypto scheme.
The SEC charged eight people with stealing investors’ money for personal use, buying real estate, boats and cars. The defendants in this case were Neil Chandrian, Garry Davidson, Michael Glaspie, Linda Knott, BannersGo, LLC, AEO Publishing Inc, Banner Co-Op, Inc, and Amy Mossel.
The defendants promised to sell CoinDeal to the victims, which was supposed to give them a large return. They also lied about CoinDeal’s valuation and named some companies allegedly involved in the acquisition. The SEC revealed that the scheme ran between January 2019 and 2022. Unfortunately, the project sale did not happen and the investors did not receive any returns for investing in the deal.
Before the CoinDeal saga, the SEC had too investigated two advisory companies, Edelman Blockchain Advisors LLC and Creative Advancement LLC, and ther owner Gabriel Edelman. The defendants allegedly operated a Ponzi scheme between February 2017 and May 2021, in which investors lost $4.4 million.
Featured image from Pixabay and chart from Tradingview.com
