Securities Regulation Daily Wrap Up, BLOCKCHAIN—N.D. Ga.: SEC stops $60M Ponzi scheme, (Aug 29, 2024)
Organizations Mentioned:GCZ Global LLC | Triten Financial Group, LLC
Commission froze two scheming brothers’ assets.
Georgia’s Northern District Court granted the SEC’s request to freeze the assets of two brothers residing in Florida and Texas, respectively, who created a Ponzi Scheme that bilked 80 U.S. investors out of $60 million over an 18-month period. The Commission’s complaint, claiming antifraud violations of federal Securities Act Sections 17(a) through (c) and Exchange Act Section 10(b), requested—besides the asset freeze—permanent injunctions, disgorgement, prejudgment interest and civil monetary penalties (SEC v. Adam, No. 1:24-cv-03774-MHC (N.D. Ga. Aug. 26, 2024)).
Crypto Ponzi scheme. The Commission’s complaint alleged that from January 2023 to June 2024, the brothers solicited investors by promising up to 13.5 percent monthly returns on a cryptocurrency investment. Specifically, the brothers falsely told investors that they created a “bot” which operated on a safe crypto asset trading platform in a lending pool that would, through smart contracts, fund “flash loans” to complete certain arbitrage trades. But in reality, the lending pool did not exist, with the brothers using the millions of dollars of investor funds to pay supposed returns to existing investors and to buy lavish cars, trucks, recreational vehicles and condominiums.
The SEC Atlanta Office’s Associate Enforcement Director, Justin Jeffries stated “As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods. The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors.”
This case is No. 1:24-cv-03774-MHC.
Attorneys: Kristin Wilhelm Murnahan for the SEC.
Companies: Triten Financial Group, LLC; GCZ Global LLC
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