"Brothers in the US Set Up Trading Bot Scam 'Arbitrage Cannot Lose', SEC Claims $60 Million"
The U.S. Securities and Exchange Commission (SEC) has charged a pair of brothers with running a $60 million Ponzi scheme, in which they allegedly operated a cryptocurrency bot claiming to generate monthly returns of 13.5% for investors through automated arbitrage. Currently, over 80 investors across the U.S. have fallen victim to the scam. The brothers are accused of squandering investors' funds on extravagances, including purchasing luxury cars and multi-million-dollar apartments.
Table of Contents
Fake Trading Bot Arbitrage Scam, Investors Misled with Claims of "No Investment Risk"
According to the SEC's allegations, from January 2023 to June 2024, these brothers claimed that their trading bot could identify arbitrage opportunities on cryptocurrency platforms, exploiting price differences between markets to simultaneously buy and sell assets.
The deceived investors were promised to put their funds into a lending pool to sustain flash loan transactions, informing them that the funds would be borrowed and immediately returned within the same blockchain transaction.
Note: "Flash loans" are uncollateralized cryptocurrency loans where borrowers borrow funds and repay them within the same block transaction.
At the same time, the brothers told investors, "Unless there is a global market collapse, there is almost no investment risk."
Similar case in Taiwan: Brick-moving scam convicted! Taiwan Ton ecosystem member on probation for five years, highlighting regulatory loopholes in virtual asset management companies
"Cryptocurrency Bot Doesn't Even Exist" Brothers Engage in Fraudulent Spending
The SEC stated: "This trading scheme was entirely fraudulent, and the cryptocurrency bot the brothers claimed to have doesn't even exist."
Justin Jeffries also stated, "Out of the $61.5 million raised by the brothers, $53.9 million was misappropriated. While some funds were recovered by investors, the majority of the funds were used for the brothers' lavish spending, including buying cars, trucks, and constructing a $30 million luxury apartment building."
SEC Takes Aggressive Action to Prevent Fraud, Emergency Asset Freeze
To halt this scheme, the SEC has issued an emergency asset freeze on the brothers' company. The SEC claims that one of the brothers misrepresented his background to gain investors' trust, concealing his criminal record of three securities fraud convictions.
Justin C. Jeffries, Deputy Chief of Enforcement in the SEC's Atlanta office, stated: "The SEC will take all measures to prevent investment fraud using any new technology."
Currently, the SEC has filed a lawsuit, accusing the brothers and their company of violating federal securities laws' anti-fraud provisions. They seek permanent injunctions, recovery of ill-gotten gains, confiscation of funds raised from investors, and civil penalties.
SEC Freezes Assets, Brothers Face Legal Sanctions
To prevent this scam, the SEC has taken emergency asset freezes on the brothers' companies, GCZ Global and Triten Financial Group. The SEC also accuses Jonathan Adam of misrepresenting his personal background to win investors' trust and failing to disclose his three prior convictions for securities fraud.
The SEC charges them with violating federal securities laws' anti-fraud provisions. The SEC is seeking permanent injunctions against the brothers' companies, confiscation of all funds obtained from investors, and civil penalties.
Related
- The main suspect in a 2.2 billion fraud case was released on bail with a hefty sum, while the founder of ACE and two others had bail set as high as 58 million.
- Former chairman and lawyer of Jianyi Law Firm, Wang Chenhuan, suspected of aiding fraud and money laundering, has had his bail increased to 8 million and his freedom restricted.
- "Police Officer in Changhua Joins Scam Group After Being Cheated in Cryptocurrency Trading, Convicted for Providing Money Laundering Services Using Dummy Accounts"