The US Securities and Trade Fee (SEC) has taken emergency motion towards Miami-based funding advisor Bkcoin and one among its principals, Kevin Kang, for his or her alleged involvement in a $100 million crypto fraud scheme. The SEC alleges that Bkcoin and Kang “whatever the construction of the funds, commingled investor belongings and used greater than $3.6 million to make Ponzi-style funds to fund buyers.”
The SEC’s motion contains an asset freeze, appointment of a receiver and different injunctive reduction towards Bkcoin and Kang. The regulator defined that from at the least October 2018 to September 2022, Bkcoin raised about $100 million from at the least 55 buyers to spend money on crypto belongings.
Bkcoin and Kang assured buyers that their cash could be used primarily to commerce cryptoassets and represented that Bkcoin would generate returns for buyers by way of individually managed accounts and 5 personal funds. Nonetheless, the defendants allegedly misappropriated investor funds and made materials misrepresentations to sure buyers by falsely claiming that both the corporate or one among its funds had obtained an audit opinion from a “high 4 auditor”.
The grievance alleges Kang embezzled at the least $371,000 of investor cash to pay for holidays, tickets to sporting occasions and an residence in New York Metropolis, amongst different issues. Kang additionally allegedly tried to hide the unauthorized use of investor cash by offering altered paperwork with inflated checking account balances to the third-party administrator for a number of the funds.
The SEC seeks everlasting injunctions towards each defendants, in addition to disgorgement, prejudgment curiosity and civil penalties. Moreover, the grievance seeks an officer and director bar and conduct-based injunction towards Kang.
The SEC’s motion towards Bkcoin and Kang highlights the dangers of investing within the cryptocurrency market. The SEC has repeatedly warned buyers concerning the dangers of investing in preliminary coin choices (ICOs) and different digital belongings.
Traders ought to all the time conduct thorough due diligence earlier than investing in any asset, together with cryptocurrencies. They need to even be cautious of funding alternatives that promise excessive returns with little or no danger.
The SEC’s motion towards Bkcoin and Kang serves as a reminder that the regulator will take swift motion towards those that violate securities legal guidelines and defraud buyers.
The cryptocurrency market has seen vital progress in recent times, with the entire market capitalization of all cryptocurrencies surpassing $2 trillion in 2021. Nonetheless, the market stays largely unregulated, making it prone to fraud and abuse.
Traders ought to work with respected funding advisors and platforms when investing in cryptocurrencies. They need to additionally hold knowledgeable of legislative developments and be cautious of fraudulent schemes.