The U.S. Securities and Change Fee (SEC) has taken emergency motion in opposition to Miami-based funding adviser Bkcoin and one in every of its principals, Kevin Kang, for his or her alleged involvement in a $100 million crypto fraud scheme. The SEC alleges that Bkcoin and Kang “disregarded the construction of the funds, commingled investor belongings, and used greater than $3.6 million to make Ponzi-like funds to fund traders.”
The SEC’s motion consists of an asset freeze, appointment of a receiver, and different emergency reduction in opposition to Bkcoin and Kang. The regulator detailed that from at the very least October 2018 by September 2022, Bkcoin raised roughly $100 million from at the very least 55 traders to put money into crypto belongings.
Bkcoin and Kang assured traders that their cash can be used primarily to commerce crypto belongings and represented that Bkcoin would generate returns for traders by individually managed accounts and 5 personal funds. Nonetheless, the defendants allegedly misused investor funds and made materials misrepresentations to some traders by falsely claiming that both the corporate or one in every of its funds had acquired an audit opinion from a “prime 4 auditor.”
The criticism alleges that Kang misappropriated at the very least $371,000 of investor cash to pay for holidays, sporting occasion tickets, and a New York Metropolis house, amongst different issues. Kang additionally allegedly tried to hide the unauthorized use of investor cash by offering altered paperwork with inflated checking account balances to the third-party administrator for sure of the funds.
The SEC seeks everlasting injunctions in opposition to each defendants, in addition to disgorgement, prejudgment curiosity, and a civil penalty. As well as, the criticism requires an officer and director bar and conduct-based injunction in opposition to Kang.
The SEC’s motion in opposition to Bkcoin and Kang highlights the dangers related to investing within the cryptocurrency market. The SEC has repeatedly warned traders concerning the dangers of investing in preliminary coin choices (ICOs) and different digital belongings.
Traders ought to all the time conduct thorough due diligence earlier than investing in any asset, together with cryptocurrencies. They need to even be cautious of funding alternatives that promise excessive returns with little or no danger.
The SEC’s motion in opposition to Bkcoin and Kang serves as a reminder that the regulator will take swift motion in opposition to those that violate securities legal guidelines and defraud traders.
The cryptocurrency market has seen vital progress in recent times, with the entire market capitalization of all cryptocurrencies surpassing $2 trillion in 2021. Nonetheless, the market stays largely unregulated, making it prone to fraud and abuse.
Traders ought to work with respected funding advisers and platforms when investing in cryptocurrencies. They need to additionally keep knowledgeable about regulatory developments and be cautious of fraudulent schemes.
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