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The Securities and Exchange Commission has initiated an emergency action against investment advisor BKCoin Management in connection with a crypto fraud scheme worth $100 million.
According to the SEC, the investment advisor allegedly commingled customer funds, using millions to make Ponzi-like payments.
Another SEC Crackdown
In yet another crackdown, the Securities and Exchange Commission (SEC) announced that it was filing an emergency action against investment adviser BKCoin Management. According to the SEC, the action was initiated in connection with a $100 million crypto fraud scheme, specifically naming co-founder Kevin Kang. The agency also stated that they had frozen the adviser’s assets, alleging that the Miami-based BKCoin Management raised $100 million from 55 investors to plug it into cryptocurrency.
However, instead of utilizing the funds where they were supposed to, the company used them to purchase expensive items and make “Ponzi-type payments.” In a press release, the SEC stated,
“The Securities and Exchange Commission today announced that it filed an emergency action in which it successfully obtained an asset freeze, appointment of a receiver, and other emergency relief against Miami-based investment adviser BKCoin Management LLC and one of its principals, Kevin Kang, in connection with a crypto asset fraud scheme.”
The SEC also alleged that one of BKCoin Management’s principals, Kevin Kang, misappropriated funds to the tune of $371,000, all of which was investor money, using it to pay for expensive holidays, an apartment, and falsified documents. Eric I. Bustillo, the director at the SEC’s Miami Regional Office, stated that the defendants, through their actions, misappropriated funds, created false documents, and engaged in Ponzi-like behavior. The announcement stated,
“As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct. This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.”
The Securities and Exchange Commission also stated that it had already initiated the freezing of assets and obtained other emergency relief against MKCoin Management. The commission is now hopeful of getting permanent injunctions against BKCoin and Kang. It is also seeking disgorgement, prejudgement interest, and a civil penalty from the defendants. It is also looking to obtain an officer and director bar and a conduct-based injunction against Kang. According to the SEC statement,
“The complaint names as relief defendants and seeks disgorgement from each of the funds and Bison Digital LLC, an entity that allegedly received approximately $12 million from BKCoin and the funds. The court also granted emergency relief against the relief defendants, which the SEC sought, including the appointment of a receiver.”
A Tough Stance
The Securities and Exchange Commission has, in recent years, taken a tough stand when it comes to the crypto space. The commission had, in 2018, begun targeting ICOs, a type of fundraising in crypto, and token sales, calling them unregistered securities sales. Under Chair Gary Gensler, the SEC has taken an even more aggressive approach, intensifying its crackdown against crypto. According to Gensler, every coin and token apart from Bitcoin is an unregistered security.
As a result, several high-profile companies have found themselves on the SEC radar. In January, Genesis and Gemini were both hit with several charges in connection with offering unregistered securities. Just earlier this month, Kraken was fined $30 million for violating securities laws.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.