The US Securities and Exchange Commission (SEC) has taken action against two firms and four individuals allegedly running a crypto pump-and-dump scheme. “Although this case involves crypto assets, it bears the hallmarks of a classic pump-and-dump scheme,” the SEC said.
SEC Blames 2 Firms in Crypto Pump and Dump Case
The US Securities and Exchange Commission (SEC) announced on Friday that it has filed charges against two companies and four individuals for allegedly engaging in a cryptocurrency pump-and-dump scheme.
The two companies are Bermuda-based Arbitrade Ltd. and Canadian firm Cryptobontix Inc. The other defendants are their principals – Troy RJ Hogg, James L. Goldberg and Stephen L. Braverman – and Max W. Barber, founder and sole owner of SION Handel. In this case, SION will be named as the defendant.
The defendants allegedly committed a “pump and dump scheme using a crypto asset called ‘dignity’ or ‘DIG,'” the SEC stated, adding:
Although this case involves crypto assets, it bears the hallmarks of a classic pump-and-dump scheme.
The securities regulator stated that between May 2018 and January 2019, the two companies “issued announcements falsely alleging that Arbitrade had acquired and received $10 billion worth of gold bullion” about the four defendants.
They further claimed that “the company intended to back every DIG token issued and sold to investors with this $1.00 gold and that independent accounting firms had performed a ‘audit’ of the gold and confirmed its existence.”
The SEC said:
In reality… the gold acquisition transaction was just a sham to stimulate demand for DIG.
This allowed the defendants to sell at least $36.8 million of the crypto token, including to U.S. investors, “at prices fraudulently inflated by the public misrepresentations about the alleged gold acquisition,” the SEC said.
The regulator added:
The SEC’s lawsuit alleges that the defendants violated the anti-fraud and securities registration provisions of federal securities laws.
The SEC “is seeking permanent injunctive relief, production plus penalty interest, and civil penalties against all defendants, as well as suspensions from office and directorships against individual defendants.”
What do you think of the SEC cracking down on this crypto pump-and-dump scheme? Let us know in the comment section below.
Kevin Helms
photo credit: Shutterstock, Pixabay, WikiCommons
Disclaimer: This article is for informational purposes only. It is not a direct offer, or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.