Many crypto investors have lost their funds in scams such as BKCoin. For example, Bitcoinist reported that the DeFi sector accounted for $678 million to hackers in the second quarter of 2022, underlining the risks inherent in the industry.
Interestingly, these scams sometimes come in official packages, tricking investors into thinking they are legitimate. As alleged by the US Securities and Exchange Commission, the new scam package is an offer from BKCoin and its co-founder. The commission has filed an emergency action against a financial advisory firm for defrauding investors.
BKCoin And Co-Founder Theft of $100 Million, SEC Says
The SEC filed a complaint alleging that the defendants had stolen $100 million through a fraudulent crypto scam. The SEC shows a press release asserted that the defendants defrauded 55 investors between October 2018 and September 2022.
The company and its co-founder Kevin Kang have told investors that they will use the funds to trade crypto assets, thus achieving a large return on investment. The defendants even lied to investors that they had received audit opinions from the top four auditors.
But instead of trading crypto with investors’ funds, the defendants used $3.6 million to pay others in a typical Ponzi scheme model. Later, Kang was accused of embezzling more than $370,000 for his interests, such as paying for vacations, buying property in New York City, and paying for sports event tickets.
After filing an emergency action, the commission froze some of BKCoin’s assets, alleging that the defendants violated federal securities laws regarding fraud. It is also seeking a permanent injunction against the duo and disgorgement of Bison Digital LLC for receiving $12 million from BKCoin.
Crackdown Noted On Scammers
In addition to BKCoin and its co-founder, the SEC has taken regulatory action against other fraudsters operating in the industry. A notable case is the 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, are 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 generate a good profit for them. He also lied about the value of CoinDeal and mentioned several companies allegedly involved in the acquisition. The SEC announced that the scheme was implemented between January 2019 and 2022. Unfortunately, the sale of the project did not happen, and the investors did not return anything to invest in the deal.
Before the CoinDeal saga, so did the SEC investigated two advisory companies, Edelman Blockchain Advisors LLC and Creative Advancement LLC, and thair owner Gabriel Edelman. The defendants allegedly operated a Ponzi scheme between February 2017 and May 2021, which caused investors to lose $4.4 million.
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