On Monday, the US Securities and Exchange Commission charged two brothers with defrauding more than 80 investors over a year in a $60 million crypto Ponzi scheme.
The SEC confirmed an “emergency asset freeze” against Jonathan Adam of Angleton, Texas, and his brother Tanner Adam of Miami, Florida, as well as their businesses GCZ Global LLC and Triten Financial Group LLC. press release on Monday.
Filed in the US Northern District Court of Georgia complaint It accuses the Adam brothers and their companies of violating anti-fraud provisions in the federal securities laws.
According to the SEC, the brothers misled investors by promising 13.5% monthly returns between January 2023 and June 2024 with a cryptocurrency trading “bot” that could identify profitable arbitrage opportunities.
The SEC accuses Adam Brothers of fraudulently funding “flash loans” through smart contracts to execute the trades, claiming their money would be placed in a lending pool.
Flash loans, which allow loans to be borrowed without collateral as long as they are repaid in the same blockchain transaction, are considered a foolproof way to make money. However, according to the SEC's complaint, the Adam brothers created a so-called lending pool.
The SEC disclosed that the brothers informed investors that their funds will be transferred to the cryptocurrency exchange Kraken, and the US dollar will be converted to the Tether stablecoin USDT.
The Adam Brothers assured investors that USDT can be quickly entered into crypto wallets and used for high-frequency trading in the lending pool.
“Of the $61.5 million in investor funds raised by the defendants, at least $53.9 million was misappropriated or used to pay interest, pay finders' fees, and repay principal existing investors,” the SEC said in its complaint.
The SEC also said the Adam brothers spent millions of dollars to support their lavish lifestyle.
Tanner Adams used investor funds to make a down payment on a $30 million Miami condo. At the same time, the SEC accused Jonathan Adams of spending at least $480,000 on luxury vehicles, including cars, trucks and recreational vehicles.
Adam Brothers continued to distribute the assets through June 2024, siphoning investors' funds from less than $400,000 in controlled bank accounts, according to the complaint.
The SEC will pursue permanent injunctions, restitution and civil penalties.
Edited by Sebastian Sinclair.
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