The regulator has taken yet another step in its ongoing enforcement campaign. This time, it has accused BKCoin Management and its key person, Kevin Kang, of being involved in a fraudulent operation involving cryptocurrency assets.
According to the regulating body (1), the company raised around one hundred million dollars from fifty-five investors to initially invest the money in cryptocurrency assets.
Instead of using the funds for this objective, BKCoin Management invested them in other personal luxury items and then began making payments in a Ponzi-like fashion.
The SEC clarified that Kang and his crew had fraudulently used at least $371,000 worth of investors’ money to pay for vacations and flats.
The intricacy of their fraudulent operation was also displayed when they attempted to cover their tracks by falsifying documents, which was done to cover their footprints.
“According to our allegations, investors sent the accused their money so that they may trade in digital currencies. Instead, the defendant engaged in Ponzi-like behavior produced phony documents, and stole the victims’ money, according to Eric I. Bustillo, Director of the SEC’s Miami Regional Office.”
“Our action demonstrates our ongoing commitment to safeguarding investors and eradicating fraud in all securities sectors, such as the arena of crypto assets,” said the company in a statement.
According to the SEC, BKCoin used approximately $3.6 million to make payments like Ponzi, a scheme that the investigators quickly identified as fraudulent.
In its action of enforcement, the regulatory body mentioned that it had successfully placed a hold on the part of the company’s assets, in addition to obtaining, as was previously disclosed, emergency respite against the corporation.
In addition to this, the Securities and Exchange Commission (SEC) announced that it will charge the business and its owners to pay for “disgorgement, prejudgment interest, and a civil penalty from both of the offenders; and, an office and director bar and conduct-based injunction against Kang.”
The SEC Had Been Active Recently
There is one thing that is crystal evident about the SEC under the leadership of Gary Gensler, and that is the fact that there have been a number of clampdowns that have been doled out against organizations in the ecosystem of digital currencies.
The commission’s stance is that it is trying to protect investors from fraudulent activities, but proponents in the new business are already noticing the extremeness in the regulator’s actions. The agency’s defense is that it is seeking to protect investors from fraudulent endeavors.
In addition to the earlier this year crackdowns on businesses like Grayscale Investments & Genesis, the SEC has also taken after many people consider innocent businesses. These businesses include Kraken Exchange & Paxos Trust, the lender of the Binance USD (BUSD) stablecoin.
In the case of Kraken, the corporation was accused of marketing its staking service as unregistered security while at the same time classifying the BUSD stablecoin as security. This occurred when Kraken was also labeling the BUSD stablecoin as a security.
Neither of the two companies is no longer selling these two goods.
But, industry analysts appear to be concerned about the possibility that the regulator would charge more industry actors for a crime that they are not currently aware that they have performed.