The United Securities and Trade Fee (SEC) has filed an emergency motion to grab the belongings of Miami-based funding adviser BKCoin Administration LLC and its principal Kevin Kang for his or her connection to a crypto fraud scheme.
In a March 6 press assertion, the monetary regulator stated BKCoin raised round $100 million from 55 buyers. SEC added that:
“BKCoin and Kang as an alternative used among the cash to make Ponzi-like funds and for private use.”
The SEC stated BKCoin’s actions had been a violation of the antifraud provisions of the federal securities legal guidelines.
SEC alleges BKCoin made Ponzi-like funds
The monetary regulator alleged that BKCoin and Kang informed their buyers that their investments can be used to commerce crypto belongings.
The funding firm additionally promised to generate returns for buyers “by way of individually managed accounts and 5 personal funds.”
The regulator alleged that the BKCoin and Kang disregarded the funds’ construction, commingled buyers’ funds and used $3.6 million to make Ponzi-like funds to buyers.
In addition to that, Kang was additionally accused of misappropriating round $371,000 of buyers’ cash. In line with the SEC, Kang used the funds to pay for holidays, sporting occasions tickets, and a New York Metropolis condo.
The SEC stated Kang tried to cover this fraudulent use of buyers’ funds by “offering altered paperwork with inflated checking account balances to the third-party administrator.”
In the meantime, BKCoin additional lied that it obtained an auditor opinion from a high 4 auditor when it didn’t obtain such opinions at any time.
The regional director of SEC’s Miami workplace Eric I. Bustillo stated:
“Traders entrusted their cash to the defendants to commerce in crypto belongings. As a substitute, the defendants misappropriated their cash, created false paperwork, and even engaged in Ponzi-like conduct. This motion highlights our continued dedication to defending buyers and uprooting fraud in all securities sectors, together with the crypto asset area.”
The SEC desires a everlasting injunction, disgorgement, prejudgment curiosity, and a civil penalty in opposition to the defendants.
The SEC additional highlighted that Bison Bison Digital LLC allegedly obtained roughly $12 million from BKCoin. The SEC stated the court docket granted it emergency reduction actions in opposition to this agency and the appointment of a receiver.