Two Firms charged for Alleged Crypto Pump and Dump Scheme

Two firms made false claims that led investors into investing in a fraudulent scheme
The false promotion of the token gathered proceeds of over $36 million
DIG was delisted from the Livecoin platform

The Securities and Exchange Commission (SEC) of the United States has accused two businesses, their executives, and a fictitious international gold trader of engaging in a dishonest plan to increase demand for their digital token.

According to the agency, the defendants received over $36 million in proceeds from the token’s fictitious promotion.

A Fraudulent $10 Billion Acquisition of Gold Bullion

According to a lawsuit that was filed on September 30, 2022, a Bermuda-based company called Arbitrade, a Canadian company called Cryptobontix, Troy Hogg, who is the founder and owner of Cryptobontix, James Goldberg, Stephen Braveman, who is the COO of Arbitrade, and Max Barber, a so-called international gold trader, ran an alleged pump and dump scheme involving Dignity from 2017 to 2019.

According to the SEC’s complaint, Hogg hired Russian developers in 2017 to develop Dignity, an Ethereum-based token controlled by Cryptobontix and Hogg.The cryptocurrency began “exclusive trading” on the Russian cryptocurrency trading platform Livecoin.

Through announcements, Arbitrade and Cryptobontix claimed that the former purchased and received $10 billion worth of gold bullion from Barber’s company SION, with each of the three billion DIG tokens backed by $1 in gold.

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DIG Token Value Dropped to Zero

In addition, the businesses claimed that they hired an auditing firm to check the gold to boost investors’ confidence.The SEC, on the other hand, asserted that the gold purchase and audit never took place because they were strategies used to entice investors to purchase DIG tokens.

The SEC also stated that Hog and Goldberg sold DIG on Livecoin at artificially inflated prices, bringing in $36.8 million in total proceeds.After the value of the token fell to zero in February 2020, it was interesting to note that DIG was removed from the Livecoin platform.

According to the lawsuit, investors committed their funds using bitcoin or any other cryptocurrency in what they believed was an investment opportunity.

As a result, the defendants in the case are facing charges from the SEC for violating the antifraud and securities registration provisions of the federal securities laws.

In addition, the complaint filed by the regulator calls for the repayment of illegal gains, the payment of prejudgment interest, permanent injunctive relief, and civil monetary penalties.

Additionally, the SEC is requesting that the court grant an officer and director bar to each and every person named in the lawsuit.