The US authorities are keen to clean up the crypto ecosystem in the country and the FTX case is not going to change their minds… Four Americans are notably being prosecuted by the Securities and Exchange Commission for setting up and maintaining Trade Coin Club, which is actually a ponzi scheme involving crypto. The SEC reports that more than 100,000 people have lost more than 82,000 bitcoins or nearly $295 million at the time of the events.
Trade Coin Club is a Ponzi scheme, says SEC
The Securities and Exchange Commission (SEC) announced that it has filed charges in the U.S. District Court for the Western District of Washington against four individuals.
Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor and Jonathan Tetreault are accused of creating and maintaining Trade Coin Club.
This company was presented by its promoters as an automatic trading program. Trade Coin Club was actually a Ponzi scheme involving crypto, the SEC said.
We have evidence that Braga used Trade Coin Club to steal from hundreds of millions of investors around the world and enrich himself by exploiting their interest in investing in digital assets.David Hirsch, Head of the Crypto Asset Division of Enforcement
Trade Coin Club was created and promoted as a profit-generating company with a cryptocurrency trading bot making “millions of microtransactions” every second. Among other things, Trade Coin Club promised investors that they would earn 0.35% of their investment every day.
Trade Coin Club‘s offer was so enticing that over 100,000 people took the bait.
Between 2016 and 2018, the 4 promoters of Trade Coin Club pulled from investors more than 82,000 bitcoins. At the time of the event, this corresponded to a value of $295 million.
These funds were unfortunately not used to deploy the alleged trading bot. They were simply shared among the 4 tenors of the project.
Thus, Douver Torres Braga personally received at least 8,396 bitcoins worth $55 million at the time.
Joff Paradise received 238 bitcoins worth over $1.4 million.
Keleionalani Akana Taylor and Jonathan Tetreault received 735 bitcoins or more than $2.6 million and 158 bitcoins or more than $625,000 respectively.
US authorities at war with Ponzi schemes
The SEC has responded vigorously to the Trade Coin Club fraud. In particular, the U.S. financial watchdog has filed suit against the individuals after identifying the antifraud violations against them. The SEC hopes to obtain injunctive relief, reimbursement and civil penalties from the court.
In addition to the complaint against the 4 Trade Coin Club promoters, the SEC is taking other actions to ensure a safer cryptocurrency market. In particular, it has announced that it has put in place tools to track and analyze the Blockchain.
To ensure our marketplaces are fair and secure, we will continue to use blockchain tracking and analytics tools to help us pursue individuals who commit fraud.David Hirsch, head of the Crypto Asset Division of Enforcement.
U.S. authorities are tough on crypto projects they deem fraudulent.
Almost a month ago, eleven cryptocurrency companies were banned from operating in the state of California by the Department of Financial Protection and Innovation (DFPI). All of these companies were accused of running investment programs that paid old investors with funds from new investors. For the moment, the promoters of Trade Coin Club have not reacted to the SEC’s accusations.
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