The US Securities and Exchange Commission (SEC) has cracked down on BKCoin Management, an investment adviser, linked to a fraud case.
According to the SEC, the Miami-based company raised $100m from at least 55 investors, promising to power a large-scale crypto mining operation and generate returns for participants, but instead the company used the money to maintain exec’s luxurious lifestyles.
SEC has singled out individuals involved in the scheme, with one of the principals, Kevin Kang, said to have spent more than $371,000 on various items and trips, including renting an apartment and going on holidays.He has also falsified documents, the regulator argues.
SEC’s Miami regional office director Eric I. Bustillo said that the defendants were guilty of misappropriating the money, forging documents and generally engaging in behavior that could be classified as “Ponzi-like”.
“As the complaint alleges, the defendants disregarded the structure of the funds, commingled investor assets, and used more than $3.6m to make Ponzi-like payments to fund investors”, a statement by the SEC read.
Assets of the company have already been frozen and SEC is hoping to secure a permanent injunction against the company and its principals, among whom Kang.
The regulator has been acting tough against crypto companies in general, and doubly so when it concerns genuine cases of fraud.
Under SEC chair Gary Gensler, the regulator has become a little overbearing in its ambitions to regulate, taking the fight to legitimate businesses as well as their seedier counterparts.
The assault on BKCoin Management comes as a justified enforcement action in the regulator’s remit, however.
This comes amid calls to hasten crypto regulation although the SEC recommends consumers remain vigilant and approach companies in the crypto sector carefully and not believing overnight success stories.
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