SEC Charges 4 People in A Scandalous $295M Ponzi Scheme

The U.S. Securities and Exchange Commission (SEC) announced Friday that four people have been charged for crafting a global cryptocurrency Ponzi scheme with over 100,000 victims. 

The SEC filed charges Thursday in Seattle against the founder of Trade Coin Club and three others involved in the operation. 

Trade Coin Club Allegedly Stole $295 Million

Trade Coin Club, operating between 2016-18, was a membership club that promised profits via its multilevel marketing program. It is alleged that the club schemed 82,000 Bitcoins from investors worldwide that have a 2018 value of $295 million.

The charges are brought against Trade Coin Club founder Douver Torres Braga, Keleionalani Akana, Jonathan Tetreault and Joff Paradise. 

Braga allegedly deceived investors by promising a minimum of 0.35% daily returns generated through a bot. Instead, it seems as though Braga had a different idea–he’d keep them for himself and his cohorts.

“Braga allegedly siphoned off investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters including Paradise, Taylor and Tetreault,” announced the SEC.

The SEC claims that Braga obtained a minimum of 8,396 Bitcoins from the invested amounts. Additionally, Taylor received 735 Bitcoins, Paradise received 238 and Tetreault received 158. 

“We allege that Braga used Trade Coin Club to steal hundreds of millions from investors around the world and enrich himself by exploiting their interest in investing in digital assets,” said David Hirsch, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit.

Per the charges, the SEC claimed that Braga and Paradise violated the anti-fraud and securities registration provisions. Additionally, Paradise breached broker-dealer registration provisions of the federal securities laws.

The complaint against Taylor demands injunctive relief, disgorgement and civil penalties for violating the securities and broker-dealer registration provisions.

The SEC filed two charges against Tetreault, who settled the charges without denying or admitting wrongdoing, for violating the securities and broker-dealer registration provisions

Nothing New

Unfortunately, Ponzi schemes involving cryptocurrency are not novel operations.

The SEC sued 11 individuals associated with Forsage, an Ethereum dapp that stole $300 million from investors, in August. The Commodity Futures Trading Commission charges two men in May for using YouTube videos to scam investors out of $44 million.

So what is there to do? Well, in the words of Hirsch:

“To ensure our markets are fair and safe, we will continue to use blockchain tracing and analytical tools to aid us in the pursuit of individuals who perpetrate securities fraud.”

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