SEC Files Charges in $60M Ponzi Scheme Linked to Fake Crypto Bot

• The U.S. SEC has charged the Adam brothers with orchestrating a $60M crypto Ponzi.
• The brothers promised 13.5% monthly returns to the investors.

The United States Securities and Exchange Commission (SEC) has initiated legal action against two brothers, alleging their involvement in orchestrating a $60 million Ponzi scheme with a non-existent crypto trading bot. 

The SEC has filed a complaint in the US District Court for the Northern District of Georgia, Atlanta, against two brothers — Jonathan Adam and Tanner Adam — and their entities, GCZ Global LLC and Triten Financial Group LLC. According to the regulator’s lawsuit, they’ve deceived over 80 people by promising 13.5% monthly returns from a fake crypto bot.

Justin C. Jeffries, Associate Director of Enforcement at the SEC, stated:

 “As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes.”

Notably, the brothers convinced investors that their funds are to be wired to a crypto platform, Kraken. Investors were also told that the crypto bot was functioning on a trading platform, pinpointing arbitrage trading opportunities. Further, they have promised that the funds will be used in a lending pool to flash loans through smart contracts to execute the arbitrage trades. 

How Did Adam Brothers Spend the Funds?

The brothers used new investments to pay returns to earlier investors instead of generating profits and spent funds on luxuries for themselves. Moreover, they misspent $53.9 million on a lavish lifestyle, including purchasing luxury cars, recreational trucks, and vehicles for $480,000. Also constructing a $30 million Miami condominium. Additionally, the brothers have used $1.8 million of investor funds to build houses for their parents and in-laws.

Notably, the investors received only a fraction of their investments in return. The most of the money spent to make Ponzi-like payments and for the brothers’ extravagant expenditures.

In response to these allegations, the SEC has secured emergency asset freezes for the brothers’ entities. Whereas, the government agency is seeking permanent restraining orders against their companies, forfeiture of all funds acquired, and civil fines to hold Adams accountable for their fraudulent activities.

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