SEC seeks $1.55m civil penalty from Bitcoin Store
SEC specifies the size of civil penalties it seeks from fraudulent entities operated by Renwick Haddow.
Legal proceedings against Bitcoin scammer Renwick Haddow continue in the United States. The Securities and Exchange Commission (SEC) has quantified the civil penalties it seeks from defendants in the case captioned Securities and Exchange Commission v. Haddow et al (1:17-cv-04950).
In a Letter addressed to Hon. Lorna G. Schofield of the New York Southern District Court, the Commission says it seeks civil penalties of $4,526,765 from Ponzi scheme Bar Works, Inc. and $1,810,706 from Bar Works 7th Avenue, Inc., whereas the penalty sought from Bitcoin Store is $1,550,000. The penalty for Bitcoin Store is calculated by multiplying the lower maximum statutory third-tier penalty applicable to the earlier period when Bitcoin Store’s violations occurred – $775,000 – by Bitcoin Store’s two violations: misrepresentations in its differing March 2015 and May 2015 private placement memoranda.
In addition, Bitcoin Store is liable for disgorgement of $69,000 representing profits gained as a result of the conduct alleged in the SEC Complaint and as supported by the additional disgorgement evidence proffered by the Commission, together with prejudgment interest thereon in the amount of $4,179.95 for a total of $73,179.95.
The SEC is also proposing a final judgement against Bitcoin Store, which will see the entity permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly:
- to employ any device, scheme, or artifice to defraud;
- to obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
- to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.
The Commission also seeks that Bitcoin Store is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:
- to employ any device, scheme, or artifice to defraud;
- to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
- to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
In June this year, the United States Securities and Exchange Commission (SEC) filed fraud charges against Renwick Haddow, a UK citizen living in New York. The SEC alleged that he created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws. Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc.
Haddow allegedly diverted more than 80% of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco.
