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27/08/24
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U.S. SEC Targets Brothers in $60 Million Crypto Ponzi Scheme
The United States Securities and Exchange Commission (SEC) has taken legal action against two brothers, Jonathan and Tanner Adam, for their alleged involvement in a cryptocurrency Ponzi scheme that reportedly defrauded investors of around $60 million. The complaint, submitted to the United States District Court for the Northern District of Georgia on August 26, outlines how the Adams enticed over 80 individuals with claims about a fictitious crypto trading bot purportedly capable of generating monthly returns of 13.5%.
From January 2023 to June 2024, the brothers advertised the existence of a trading algorithm that would identify arbitrage opportunities across various cryptocurrency platforms. They claimed that the bot could facilitate simultaneous buy and sell transactions to take advantage of small price discrepancies in the market. Investors were assured that their contributions would be utilized in a lending pool aimed at funding flash loans, with promises of quick returns within the same blockchain transaction.
However, investigations revealed that the trading system was entirely fabricated. Allegations indicate that the Adams misappropriated approximately $53.9 million of the total $61.5 million raised from investors, using the funds instead to support extravagant lifestyles. This included expensive vehicles and a luxury condominium valued at $30 million. The SEC highlighted that the brothers made bold promises of high returns on an investment that did not exist, ultimately redistributing investor funds to create a Ponzi-like operation.
To curtail the fraudulent activities, the SEC has secured emergency asset freezes for the brothers’ companies, GCZ Global, LLC and Triten Financial Group LLC. The agency has charged the Adams with violating federal antifraud laws and is pursuing permanent injunctions against their business operations, alongside the recovery of misappropriated funds and civil penalties. Furthermore, Jonathan Adam is also accused of obscuring his prior securities fraud convictions to gain the trust of potential investors.
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