Two Firms Charged by US SEC for Crypto Pump and Dump Scheme
The US Securities and Exchange Commission (SEC) has charged two now-defunct cryptocurrency firms and their executives with allegedly running a $36.8 million pump-and-dump scam from 2017 to 2019 via a token called ‘Dignity’ (DIG) .
The SEC filing concerns Arbitrade Ltd., a Bermudan company, and Cryptobontix Inc., a Canadian company, and their founders Troy RJ Hogg, James L. Goldberg and Stephen L. Braverman. The filing also named Max W. Barber, a so-called international gold trader and the founder of SION Trading FZE, as a co-defendant.
Per details in the case, the defendants issued notices falsely claiming that Arbitrade had acquired and received title to $10 billion in gold bullion. The announcements added that the gold purchase had been audited by an accounting firm to confirm its existence.
The firms went on to lure investors, most of whom were US citizens, with these claims. They sold $36.8 million worth of DIG tokens at inflated prices under the guise that each DIG token was backed by $1 worth of gold.
The SEC has so far found that the Ethereum-based DIG tokens were created by Russian developers and used only to defraud investors. The investigation was conducted by David Staubitz and Crystal Ivory in the Miami Regional Office and was supervised by Chedly C. Dumornay, Fernando Torres and Glenn S. Gordon.
The SEC’s litigation is led by Alice Sum and overseen by Teresa Verges, who charges the defendant with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.
“The SEC’s complaint charges the defendants with violating the anti-fraud and securities registration provisions of the federal securities laws,” the filing said.
The watchdog is seeking that they pay back all profits earned under the alleged scheme, as well as additional civil monetary penalties. The commission is also seeking an officer and director against the four men.
The SEC is not giving up on the hunt for ICO-era crypto fraudsters
The case is just the latest bust by the SEC of crypto-related crimes committed during the initial coin offering (ICO) era between 2017 and 2018. The securities regulator has also recently filed and settled charges against popular crypto influencer Ian Balina for its role in the Sparkster (SPRK) ICO, which fraudulently raised over $30 million from investors.
According to a Washington Post report, the SEC considers most crypto projects from that era to be securities and therefore applies the necessary regulations to them. The report also notes that the SEC is looking to establish itself as the chief crypto regulator, a prospect that many in the crypto industry are not thrilled about.
