In its most recent round of enforcement actions, the U.S. Securities and Exchange Commission (SEC) has taken emergency action against a cryptocurrency hedge fund and one of its co-founders concerning an alleged $100 million crypto scam. On Monday, a Florida court granted the financial watchdog emergency relief to freeze assets of the Miami-based BKCoin and its co-founder Kevin Kang.
SEC Charges BKCoin For Ponzi-like Scheme
According to the authorities, BKCoin and Kang were able to amass a total of over 50 investors and use a portion of the funds generated from them to make “Ponzi-like payments” as well as for personal use. In addition to this, Kang was terminated from his position in December 2022 due to allegations of misusing customer funds to the tune of $12 million.
Read More: Check Out The Top 10 DeFi Lending Platforms Of 2023
The SEC alleged that Kang exploited investor funds to pay for things such as vacations and trips, a condo in New York City, and several other things which took the total expenses close to $371,000. Furthermore, Kang made up for the shortfall by providing “altered documents with inflated bank account balances to the third-party administrator for certain of the funds.”
BKCoin’s Fake Audit Reports
The hedge fund further deceived investors by claiming to have obtained an audit opinion from one of the “top four auditors,” when in reality neither BKCoin nor any of the funds acquired an audit opinion at any point in time.
While speaking about the ongoing irregularities in the firm, Eric I. Bustillo, Director of the SEC’s Miami Regional Office, was quoted as saying:
Investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct.
“This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena”, he further added.
The complaint filed by the SEC is the most recent example of an enforcement action that alleges violations of the antifraud provisions of the federal securities laws and targets a company or persons involved in cryptocurrency. According to the regulating body, the SEC planned to pursue disgorgement, prejudgment interest, a civil penalty, and a permanent injunction against both BKCoin and Kang.
Also Read: AI Crypto Token Fetch.AI Reveals Ambitious 2023 Roadmap; FET Price Poised For Bull Run?
