Many crypto investors have lost their funds in scams such as BKCoin. For instance, Bitcoinist reported that the DeFi sector recorded a whopping $678 million to hackers in the second quarter of 2022, confirming the risks inherent in the industry.

Surprisingly, these scams sometimes come in an official package, deceiving investors into thinking they’re legit. As alleged by the US Securities and Exchange Commission, a recent scam package is an offer from BKCoin and its co-founder. The commission has filed an emergency action against the financial advisory firm for defrauding investors. 

The SEC filed a complaint alleging that the defendants have stolen $100 million through a fraudulent crypto scam. The SEC shared a press release asserting that the defendants defrauded 55 investors between October 2018 and September 2022.

The company and its co-founder Kevin Kang had told the investors that they would use their funds to trade crypto assets, thereby earning them huge returns on their investments. The defendants even lied to the investors that they had received an audit opinion from a top-four auditor. 

But instead of trading crypto with investors’ funds, the defendants used $3.6 million to pay out to others in the usual Ponzi scheme model. Then Kang allegedly misappropriated more than $370,000 for his interest, such as paying for holidays, buying a property in New York City, and paying for sporting events tickets.

After filing the emergency action, the commission froze some of the assets under BKCoin, alleging that the defendants violated the federal securities laws on fraud. It also seeks a permanent injunction against the duo and disgorgement from Bison Digital LLC for receiving $12 million from BKCoin. 

Apart from BKCoin and its co-founder, the SEC has been taking regulatory actions against other fraudsters operating in the industry. A notable incident was a case involving CoinDeal, another fraudulent crypto scheme. 

SEC charged eight individuals for stealing investors’ money for personal use, buying properties, boats, and cars. The defendants, in this case, were Neil Chandrian, Garry Davidson, Michael Glaspie, Linda Knott, BannersGo, LLC, AEO Publishing Inc, Banner Co-Op, Inc, and Amy Mossel. 

The defendants promised to sell CoinDeal to the victims, which would supposedly yield great returns for them. They also lied about CoinDeal’s valuation and mentioned some companies allegedly involved in the acquisition. SEC disclosed that the scheme went on between January 2019 and 2022. Unfortunately, the project sale didn’t occur, and the investors didn’t make any returns for investing in the deal. 

Before the CoinDeal saga, the SEC had also investigated two advisory companies, Edelman Blockchain Advisors LLC and Creative Advancement LLC, and their owner Gabriel Edelman. The defendants allegedly operated a Ponzi scheme between February 2017 and May 2021, which saw investors lose $4.4 million.

Featured image from Pixabay and chart from Tradingview.com

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