Mar 09, 2023 05:05
<p>The US <a href="https://www.financemagnates.com/terms/s/securities-and-exchange-commission-sec/" class="terms__main-term" id="3718b4df-fc5f-479a-861e-f52759439c15" target="_blank">Securities and Exchange Commission (SEC</a>) has received emergency relief from a Florida court to freeze and appoint a receiver of the assets of BKCoin and its Co-Founder, Kevin Kang. Announced on Monday, the Miami-based <a href="https://www.financemagnates.com/cryptocurrency/uk-sends-a-gang-of-four-to-prison-for-21m-crypto-fraud/" target="_blank" rel="follow">crypto hedge fund defrauded</a> at least 55 investors after raising $100 million.</p><p>Both BKCoin and Kang have allegedly violated the antifraud provisions of the federal securities laws.</p><p>The SEC Takes Action against BKCoin </p><p>The US securities market regulator filed a sealed complaint against BKCoin and Kang on 23 February, which was sealed until Monday. The complaint alleged that Kang and his company assured investors their money would be invested in <a href="https://www.financemagnates.com/terms/c/cryptocurrencies/" class="terms__secondary-term" id="b091101e-6e02-4b36-aa0e-7c972dfdd6ed" target="_blank">cryptocurrencies</a>. In addition. the company guaranteed returns through separately managed accounts and five private funds.</p><p>However, in reality, commingled investor assets disregarding the fund's structure used more than $3.8 million for making <a href="https://www.financemagnates.com/forex/cftc-busts-145m-fx-ponzi-schemes-charges-masterminds/" target="_blank" rel="follow">Ponzi-like payments</a>. Fraudsters use the proceeds from the new investors to pay off old ones in Ponzi schemes.</p><p>Moreover, the regulatory complaint alleged that Kang misappropriated at least $371,000 of investor money for personal use, including paying for vacations, purchasing sporting event tickets, and even buying a New York apartment. Further, one of the affiliates, Bison Digital LLC, received around $12 million from BKCoin.</p><p>The hedge fund even provided altered documents with inflated bank account balances to the third-party administrator of certain funds to conceal its fraudulent activities. In addition, it falsely informed clients about the audit by a big-four audit firm. However, in reality, none of its books were audited at the time.</p><p>Recovery In Process</p><p>The SEC is now seeking to recover the BKCoin investors' proceeds and penalties from the company and its co-founder. It is also seeking a permanent injunction against BKCoin and Kang. </p><p>"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," said the Director of the SEC's Miami Regional Office, Eric Bustillo.</p><p>"This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena."</p><p>Recently, the SEC took action against several major crypto fraudsters. In January, the regulator brought charges against Neil Chandran for creating and <a href="https://www.financemagnates.com/cryptocurrency/news/us-sec-charges-individuals-behind-45m-blockchain-fraud-coindeal/" target="_blank" rel="follow">running CoinDeal</a>, a fraudulent investment scheme that raised $45 million by selling unregistered securities. It also charged algorithmic stablecoin issuer <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-terraform-labs-and-ceo-do-kwon-for-securities-fraud/" target="_blank" rel="follow">Terraform Labs and its CEO, Do Kwon</a>, for running a "multi-billion dollar crypto asset securities fraud." Kwon is currently at large and wanted in South Korea.</p>
This article was written by Arnab Shome at www.financemagnates.com.
World Crypto Global
