From: RegTech Analyst
A US regulator has charged three individuals for taking part in a bitcoin fraud that cost investors more than $11m.
The Securities and Exchange Commission (SEC) said that the fraud took place via two “fraudulent and unregistered digital asset securities offerings.”
The case was filed in the U.S. District Court for the Eastern District of New York and alleges that the people behind the scheme convinced investors to buy digital asset securities between December 2017 and May 2018.
The regulator claims that Kristijan Krstic, founder of Start Options and Bitcoiin2Gen, and John DeMarr, the primary US-based promoter for these companies, falsely claimed that Start Options was “the largest bitcoin exchange in euro volume and liquidity” and “consistently rated the best and most secure bitcoin exchange by independent news media.”
The SEC also alleges that the two individuals promoted Bitcoiin2Gen’s unregistered initial coin offering of digital asset securities known as B2G tokens.
Robin Enos worked with DeMarr. Enos has been accused by the SEC of having drafted fraudulent promotional materials that Enos knew would be disseminated to the investing public.
The SEC claims these materials contained numerous false statements. For instance, the materials supposedly claim that the B2G tokens would be deliverable on the Ethereum blockchain, that the invested funds would be used to develop a coin that was “mineable,” and that the tokens would be tradeable on a proprietary digital asset trading platform at the platform’s “launch” in early April 2018.
“The conduct alleged in this action was a blatant attempt to victimise those interested in digital asset technology and these defendants should be held accountable,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit. “In reality, we allege, these ventures were fraudulent enterprises aimed simply at misappropriating funds from investors.”
The SEC’s complaint charges Krstic and Demarr with violating the antifraud and registration provisions of the federal securities laws, and Enos with aiding and abetting the antifraud violations.
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