The United Securities and Exchange Commission (SEC) has filed an emergency action to seize the assets of Miami-based investment adviser BKCoin Management LLC and its principal Kevin Kang for their connection to a crypto fraud scheme.
In a March 6 press statement, the financial regulator said BKCoin raised around $100 million from 55 investors. SEC added that:
“BKCoin and Kang instead used some of the money to make Ponzi-like payments and for personal use.”
The SEC said BKCoin’s actions were a violation of the antifraud provisions of the federal securities laws.
SEC alleges BKCoin made Ponzi-like payments
The financial regulator alleged that BKCoin and Kang told their investors that their investments would be used to trade crypto assets.
The investment company also promised to generate returns for investors “through separately managed accounts and five private funds.”
The regulator alleged that the BKCoin and Kang disregarded the funds’ structure, commingled investors’ funds and used $3.6 million to make Ponzi-like payments to investors.
Besides that, Kang was also accused of misappropriating around $371,000 of investors’ money. According to the SEC, Kang used the funds to pay for vacations, sporting events tickets, and a New York City apartment.
The SEC said Kang tried to hide this fraudulent use of investors’ funds by “providing altered documents with inflated bank account balances to the third-party administrator.”
Meanwhile, BKCoin further lied that it received an auditor opinion from a top four auditor when it did not receive such opinions at any time.
The regional director of SEC’s Miami office Eric I. Bustillo said:
“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 SEC wants a permanent injunction, disgorgement, prejudgment interest, and a civil penalty against the defendants.
The SEC further highlighted that Bison Bison Digital LLC allegedly received approximately $12 million from BKCoin. The SEC said the court granted it emergency relief actions against this firm and the appointment of a receiver.
