Two firms and four people were allegedly involved in a scheme to pump and dump crypto assets. The U.S. Securities and Exchange Commission has now taken legal action. “Although this case involves crypto assets, it bears the hallmarks of a classic pump and dump scheme,” said the SEC.
SEC Indicts Two Firms in Crypto Pumping-and-Dump Claim
U.S. Securities and Exchange Commission (SEC), announced Friday it had filed criminal charges against four people and two companies for allegedly facilitating a crypto pump-and dump scheme.
Arbitrade Ltd., a Bermuda company, and Cryptobontix Inc. are the two defendants. The other defendants are their principals — Troy R. J. Hogg, James L. Goldberg, and Stephen L. Braverman — and Max W. Barber, founder and sole owner of SION Trading. SION Trading is named as a relief defendant.
The defendants allegedly perpetrated a “pump-and-dump scheme involving a crypto asset called ‘dignity’ or ‘DIG,’” the SEC detailed, adding:
This case, although it involves crypto assets and not traditional pump-and-dump schemes, bears all the characteristics of one.
The securities watchdog explained that between May 2018 and January 2019, the two companies, through the four defendants, “issued announcements falsely claiming that Arbitrade had acquired and received title to $10 billion in gold bullion.”
They further claimed that “the company intended to back each DIG token issued and sold to investors with $1.00 worth of this gold, and that independent accounting firms had performed an ‘audit’ of the gold and verified its existence.”
According to the SEC:
In reality … the gold acquisition transaction was merely a sham to boost demand for DIG.
This allowed the defendants to sell at least $36.8 million of the crypto token, including to U.S. investors, “at prices fraudulently inflated by the public misstatements about the supposed gold acquisition,” the SEC detailed.
The regulator then added:
The SEC’s complaint charges the defendants with violating the antifraud and securities registration provisions of the federal securities laws.
The SEC “seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties against all of the defendants, and officer-and-director bars against the individual defendants.”
Do you agree with the SEC’s decision to take action against the crypto-pump-and-dump schemes? Comment below to let us know your thoughts.
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