The United States Securities and Exchange Commission (SEC) has accused two brothers, Jonathan and Tanner Adam, of orchestrating a $60 million cryptocurrency Ponzi scheme involving a fictitious crypto trading bot. In a complaint lodged on August 26 in the U.S. District Court for the Northern District of Georgia, Atlanta, the SEC alleges that the duo lured over 80 investors with promises of a crypto bot offering a 13.5% monthly return.
Allegations of Fraud
The SEC claims that between January 2023 and June 2024, the brothers misled investors, asserting their bot could identify arbitrage opportunities across crypto platforms, allowing simultaneous asset purchases and sales to profit from minor price differences. Investors were assured their capital would be pooled to facilitate instant loans and transactions within the same blockchain operation. However, SEC Deputy Chief of Enforcement, Justin Jeffries, confirmed the bot’s nonexistence. Access COINTURK FINANCE to get the latest financial and business news.
Lavish Expenditures
Instead of legitimate trading, the SEC contends the brothers misappropriated $53.9 million out of the $61.5 million raised. Although some investors recovered part of their money, most of the funds financed a luxurious lifestyle, which included purchasing luxury vehicles and constructing a $30 million apartment complex.
Concrete Investor Inferences
Based on the SEC’s findings, investors should take the following actionable steps:
- Thoroughly vet investment opportunities and the backgrounds of those offering them.
- Be cautious of unusually high and consistent returns, as they are often a red flag.
- Verify the existence of trading technologies or bots through independent sources.
- Consult legal or financial advisors before committing to substantial investments.
The SEC has taken emergency actions to freeze the assets of Jonathan and Tanner Adam’s companies, GCZ Global, LLC, and Triten Financial Group LLC, to halt the scheme. The agency also revealed that the brothers assured investors of virtually no risk except for a global market collapse and that Jonathan Adam misrepresented his past, hiding three prior securities fraud convictions.
The SEC has accused the Adams of breaching anti-fraud provisions under federal securities laws. They seek permanent injunctions against their companies, the return of all investor funds, and civil penalties. A report from TRM Labs in June highlighted that $7.8 billion was paid to crypto pyramid and Ponzi schemes globally in 2022.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
Source: https://en.bitcoinhaber.net/sec-accuses-brothers-of-60m-crypto-ponzi-scheme