SEC: Fraudsters promised funds worth “trillions”
Federal authorities say fraudsters stole millions of dollars by promising investors access to a blockchain worth trillions.
According to the Securities and Exchange Commission (SEC), a group of people and companies perpetrated the $45 million fraud, telling investors that they could reap significant returns by investing in a blockchain technology known as CoinDeal that would be sold for trillions of dollars to a group wealthy buyers.
“We allege that the defendants falsely claimed access to valuable blockchain technology and that the impending sale of the technology will generate investment returns of more than 500,000 times for investors,” Daniel Gregus, director of the SEC’s Chicago Regional Office, said in a Wednesday (January) filing. 4) news release. “As alleged in our complaint, this was in reality nothing more than an elaborate scheme in which the defendants enriched themselves while defrauding tens of thousands of retail investors.”
The SEC said in the release that the sale of CoinDeal never happened and investors never received any money. The commission alleged that the defendants had appropriated millions in investor money for personal use, while defendant Neil Chandran bought cars, property and a boat.
According to the SEC complaint, Chandran had already been indicted by the Department of Justice (DOJ) for wire fraud and money laundering in connection with the CoinDeal scheme.
Also named in the SEC complaint were Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott and their associated businesses, all charged with violations of the Securities Act and the Exchange Act, according to the release.
Last year, PYMNTS reported an increase in the number of crypto-related scams in the wake of a Consumer Financial Protection Bureau (CFPB) report.
“Our analysis of consumer complaints suggests that bad actors are exploiting cryptoassets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra. “Americans are also reporting transaction problems, frozen accounts and lost savings when it comes to crypto assets. People should be wary of anyone seeking upfront payments in crypto assets, as this could be a scam.”
Between October 2018 and September 2022, the agency received over 8,300 complaints related to cryptoassets, most of them during 2021 and 2022. In about 40% of complaints related to cryptoassets processed since 2018, consumers reported that fraud and scams were the main problems.
“Hacks by malicious actors have destroyed crypto-assets and led to significant financial losses for consumers without being able to recover stolen funds,” the CFPB said.
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