SEC announces charges against $45 million scam CoinDeal
“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors. As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
The Securities and Exchange Commission has announced a civil complaint against individuals and corporate entities involved in a fraudulent investment scheme named CoinDeal that raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.
Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC are being sued for false and misleading statements to investors regarding the purported value of CoinDeal, from at least January 2019 to 2022.
Defendants claimed CoinDeal would be sold for trillions of dollars to billionaires
Defendants claimed that investors could generate extravagant returns by investing in CoinDeal, a blockchain technology that would be sold for trillions of dollars to a group of prominent and wealthy buyers.
However, the sale of CoinDeal never occurred and no distributions were made to CoinDeal investors, the SEC states, adding that the defendants collectively misappropriated millions of dollars of investor funds for personal use.
Neil Chandran allegedly used investor funds to purchase items such as cars, real estate, and a boat. In June 2022, the U.S. Department of Justice indicted Chandran in the U.S. District Court for the District of Nebraska on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds for his involvement in CoinDeal.
Daniel Gregus, Director of the SEC’s Chicago Regional Office, said: “We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors. As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
SEC sued Trade Coin Club scammers
In late 2022, the SEC announced charges against famous fraudulent crypto Ponzi scheme, Trade Coin Club, a “multi-level marketing program” that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot.
Trade Coin Club raised more than 82,000 bitcoin – valued at $295 million at the time – from more than 100,000 investors worldwide.
Defendants Douver Torres Braga and Joff Paradise told investors the bot made “millions of microtransactions” every second, and that investors would receive minimum returns of 0.35 percent daily.
According to the SEC, however, Douver Torres Braga siphoned off investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters, including defendants Paradise, Taylor, and Tetreault.
Operating as a Ponzi scheme, investor withdrawals came entirely from deposits made by investors, not from any crypto asset trading activity by a bot or otherwise, the SEC claims, further alleging the overall amounts received by each of the defendants:
- Braga personally received at least 8,396 bitcoin of the amounts invested (worth $55 million at the time);
- Paradise received 238 bitcoin (worth more than $1.4 million at the time);
- Taylor received 735 bitcoin (worth more than $2.6 million at the time);
- Tetreault received 158 bitcoin (worth more than $625,000 at the time).