The United States Securities and Exchange Commission (SEC) has taken action against two companies and four individuals who allegedly carried out a crypto pump and dump scheme. “While this case involves crypto assets, it bears the hallmarks of a classic pump and dump pattern,” the SEC said.
SEC Charges 2 Firms in Crypto Pump and Dump Case
The U.S. Securities and Exchange Commission (SEC) said on Friday it had filed charges against two companies and four individuals who allegedly perpetrated a cryptocurrency pump-and-dump scheme.
The two companies are Bermuda-based Arbitrade Ltd. and Canadian-based Cryptobontix Inc. The other defendants are their executives – Troy RJ Hogg, James L. Goldberg and Stephen L. Braverman – and Max W. Barber, founder and sole owner of SION. Trade. SION is named an alternate defendant in the case.
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The defendants allegedly perpetrated a “pump and dump scheme involving a crypto asset called ‘dignity’ or ‘DIG’,” the SEC detailed, adding:
Although this case involves crypto assets, it bears the hallmarks of a classic pump and dump scheme.
The securities watchdog explained that between May 2018 and January 2019, the two companies, through the four defendants, “published advertisements falsely claiming that Arbitrade had acquired and received the title of 10 billion dollars in gold bullion”.
They further claimed that “the company intends to back each DIG token issued and sold to investors with $1.00 of that gold, and that independent accounting firms have performed an ‘audit’ of the gold and verified his existence”.
The SEC said:
In reality…the gold acquisition transaction was just a sham to stimulate demand for DIG.
This allowed the defendants to sell at least $36.8 million of the crypto token, including to US investors, “at prices fraudulently inflated by the public misrepresentations regarding the alleged gold acquisition,” the SEC detailed. .
The regulator added:
The SEC complaint accuses the defendants of violating the anti-fraud and securities registration provisions of the federal securities laws.
The SEC is “seeking a permanent injunction, restitution plus prejudgment interest and civil penalties against all defendants, as well as officer and director bans against individual defendants.”
What do you think of the SEC taking action against this crypto pump and dump scheme? Let us know in the comments section below.
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