SEC Charged Creator of CoinDeal Crypto Scheme for Fraudulent investment
SEC charged the creator of the CoinDeal Crypto Scheme and seven others with fraud totalling US$45M
The Securities and Exchange Commission (SEC) of the United States has charged the creator of the CoinDeal Crypto Scheme and seven others with participating in a fraudulent investment scheme in which they raised more than USD 45 million from the sale of unregistered securities to tens of thousands of investors.
According to the regulator’s complaint, the individuals or entities involved Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC falsely claimed that investors could generate “extravagant returns” by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to a group of prominent and wealthy individuals. Although cryptocurrency carries risks and volatility, the market has attracted traders in recent years as investors seek quick profits.
From at least January 2019 to 2022, Chandran, Davidson, Glaspie, Knott, and Mossel allegedly made false and misleading statements to investors about the purported value of CoinDeal, the parties involved in the supposed sale of CoinDeal, and the use of investment proceeds, the US financial market regulator. Furthermore, it stated that no such CoinDeal sale ever occurred and that no distributions were made to CoinDeal investors. The complaint also claims that the defendants misappropriated millions of dollars in investor funds for personal use and that Neil Chandran used investor funds to buy cars, real estate, and a boat.
We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate more than 500,000 times investment returns for investors.
As alleged in our complaint, the defendants enriched themselves while defrauding tens of thousands of retail investors.
The dramatic collapse of the trading platform FTX in 2022 appeared to have added to regulators’ and central banks’ concerns. FTX was a well-known cryptocurrency exchange that went bankrupt in November due to reported misappropriation of customer funds.
The Federal Reserve Board of Governors (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued a joint statement regarding crypto risks.
Risks such as fraud and scams, legal uncertainties, inaccurate or misleading representations and disclosures, and volatility are associated with crypto-assets, according to the joint statement, and participants and banking organizations should be aware of them.