The US Securities and Exchange Commission (SEC) filed an emergency action against the Miami-based financial advisor firm – BKCoin Management LLC – and its Co-Founder Kevin Kang, claiming they have defrauded investors with $100 million via a fraudulent crypto scheme.
The agency seeks to impose financial penalties on the organization and a conduct-based injunction against Kang.
Stealing for Personal Benefits?
In a recent press release, the US securities regulator asserted that BKCoin raised around $100 million from at least 55 investors between October 2018 and September 2022. The company and one of its founders – Kevin Kang – assured customers their funds will be used to trade cryptocurrencies, promising significant returns on the investment.
Instead, the SEC suggested that the defendants disregarded the outlined plan using $3.6 million of the total sum to make Ponzi-like payments, Kang supposedly stole over $370,000 to pay for holidays, sporting events tickets, and even a property in New York City.
The complaint alleges that BKCoin lied to users that it received an audit opinion from a “top four auditor” while, in fact, it never obtained such a notion.
“As we allege, 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,” Eric I. Bustillo – Director of the SEC’s Miami Regional Office – stated.
As part of the emergency action, the watchdog froze some assets belonging to BKCoin. It alleged the company and Kang of violating the anti-fraud provisions of the federal securities laws and insisted on permanent injunctions against both defendants. It also sought disgorgement from Bison Digital LLC – a Virtual Asset Service Provider that purportedly received $12 million from BKCoin.
The SEC’s Previous Action
The regulator charged eight individuals, Neil Chandran being one of them, and several entities of draining $45 million from investors via a fraudulent cryptocurrency scheme named CoinDeal. It claimed the suspects used the sum to purchase properties, cars, and a boat.
“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors.
As alleged in our complaint, in reality, this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors,” Daniel Gregus – Director of the SEC’s Chicago Regional Office – commented.
This is not the first time Chandran has faced law issues. The US Department of Justice previously arrested him for offenses related to wire fraud and handling illegal money transactions while being part of CoinDeal. As such, the SEC insisted he should be a subject of a conduct-based injunction.
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