SEC Halts Miami-Based Crypto Scam Worth $100 Million
SEC Takes Emergency Action Against BKCoin Management for Alleged Crypto Fraud Scheme
The U.S. Securities and Exchange Commission (SEC) has announced emergency action against investment adviser BKCoin Management for an alleged fraud scheme. The SEC claims that the Miami-based firm raised $100 million from at least 55 investors to invest in cryptocurrency, but instead used the funds to purchase luxury items and make “Ponzi-like payments.”
One of BKCoin Management’s principals, Kevin Kang, is accused of misappropriating at least $371,000 of investor money to pay for holidays and an apartment, as well as falsifying documents. The SEC alleges that the defendants “disregarded the structure of the funds, commingled investor assets, and made Ponzi-like payments to earlier investors using new investor funds.”
Eric I. Bustillo, Director of the SEC’s Miami Regional Office, stated that the defendants “misappropriated their money, created false documents, and even engaged in Ponzi-like conduct.” The SEC’s emergency action seeks to freeze the defendants’ assets and appoint a receiver to take control of the firm.
This is the latest in a series of SEC crackdowns on crypto-related fraud and misconduct. Last month, the regulator filed a lawsuit against Ripple Labs, alleging that the company had conducted an unregistered securities offering through its XRP token. The SEC has also issued warnings to investors about the risks of investing in cryptocurrencies and initial coin offerings (ICOs).