SEC Charges Ponzi Brothers Over $60M Over Crypto Trading Bot
The United States Securities and Exchange Commission (SEC) has charged two brothers with a $60 million crypto Ponzi scheme featuring a crypto trading bot that never existed.
In a complaint filed on August 26 in the United States District Court for the Northern District of Georgia, Atlanta, the SEC accused Jonathan Adam and his brother Tanner Adam of defrauding more than 80 people of a crypto bot that could net investors of 13.5% monthly returns.
Ponzi schemes rely on recruiting large numbers of investors to fund the elderly. Source: Cointelegraph
The government agency said that from January 2023 to June 2024, the brothers identified for their investor bot arbitrage trading opportunities on crypto platforms, and at the same time could buy and sell assets to take advantage of small price differences in different markets.
Investors are promised that their money will go into a loan pool to fund flash loans and complete trades.
According to Justin Jeffries, associate director of enforcement in the SEC's Atlanta regional office, the trading scheme was completely fraudulent, and it didn't exist.
Instead, he accuses the two of misappropriating $53.9 million of the $61.5 million raised. Investors got some money back, but the lion's share was used to finance lavish lifestyles, including buying cars and trucks and building a $30 million condominium.
The brothers have been accused of misappropriating their investors' money for their lavish lifestyles. Source: SEC
“Allegedly, the Adam brothers promised their investors huge returns on zero crypto investments, then used the investors' funds to make Ponzi-like payments and buy designer goods, luxury vehicles and millions of dollars,” Jeffries said.
The SEC obtained emergency asset freezes for Jonathan and Tanner Adams' companies GCZ Global, LLC and Triten Financial Group LLC to stop the scheme.
According to the SEC report, the brothers told investors that the risk of investing in the short term of a global market crash was “absolutely nonexistent.”
Related: How to Tell if a Cryptocurrency Project is a Ponzi Scheme
The government agency said Jonathan Adam misrepresented his background to gain investors' trust and failed to disclose three previous convictions for securities fraud.
The SEC charged Jonathan Adams and Tanner Adams with violating the anti-fraud provisions of the federal securities laws.
It seeks permanent sanctions against the brothers' companies, forfeiture of all money taken from investors and civil penalties.
In June, blockchain intelligence firm TRM Labs reported that $7.8 billion will be paid to cryptocurrency pyramid and Ponzi schemes worldwide by 2022.
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