SEC Charges Creator of Global Crypto Ponzi Scheme and Three US Promoters in Connection with $295 Million Fraud
Trade Coin Club raised money from more than 100,000 investors worldwide
The Securities and Exchange Commission today announced charges against Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor, and Jonathan Tetreault for their roles in Trade Coin Club, a fraudulent crypto Ponzi scheme that raised more than 82,000 bitcoin, valued at $295 million at the time, from more than 100,000 investors worldwide.
According to the SEC’s complaint, filed in the United States District Court for the Western District of Washington, Braga created and controlled Trade Coin Club, a multi-level marketing program that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot. The SEC alleges that Braga and Paradise lured investors with false representations that the bot made “millions of microtransactions” every second, and that investors would receive minimum returns of 0.35 percent daily. However, instead of deploying investor funds for the purported trading bot, Braga allegedly siphoned off investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters, including Paradise, Taylor, and Tetreault.
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The SEC further alleges that Trade Coin Club operated as a Ponzi scheme and that investor withdrawals came entirely from deposits made by investors, not from any crypto asset trading activity by a bot or otherwise. The complaint further alleges that Braga personally received at least 8,396 bitcoin of the amounts invested (worth $55 million at the time), Paradise received 238 bitcoin (worth more than $1.4 million at the time), Taylor received 735 bitcoin (worth more than $2.6 million at the time), and Tetreault received 158 bitcoin (worth more than $625,000 at the time).
“We allege that Braga used Trade Coin Club to steal hundreds of millions from investors around the world and enrich himself by exploiting their interest in investing in digital assets,” said David Hirsch, Chief of the Enforcement Division’s Crypto Assets and Cyber Unit. “To ensure our markets are fair and safe, we will continue to use blockchain tracing and analytical tools to aid us in the pursuit of individuals who perpetrate securities fraud.”
The SEC’s complaint alleges that Braga violated the antifraud and securities registration provisions, Paradise violated the antifraud, securities registration, and broker-dealer registration provisions, and Taylor violated the securities and broker-dealer registration provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement, and civil penalties. The SEC filed a second complaint alleging that Jonathan Tetreault violated the securities and broker-dealer registration provisions of the federal securities laws. Without admitting or denying the allegations, Tetreault agreed to settle the SEC’s charges. The settlement is subject to Court approval.
The SEC’s investigation was conducted by Serafima K. McTigue of the Crypto Assets and Cyber Unit and Victor Hong of the San Francisco Regional Office. The case was supervised by Steven Buchholz, Mr. Hirsch, and Jorge G. Tenreiro of the Crypto Assets and Cyber Unit. The litigation is being conducted by John Han of the San Francisco Regional Office and Ms. McTigue. The Commission appreciates the assistance of Brazil’s Comissão de Valores Mobilários, Portugal’s Comissão do Mercado de Valores Mobiliários, the Finland Financial Supervision Authority, and the Korea Financial Services Commission.
The SEC’s Office of Investor Education and Advocacy and Enforcement’s Retail Strategy Task Force has issued an Investor Alert on Digital Asset and Crypto Investment and an Investor Alert on Pyramid Schemes Posing as Multi-Level Marketing Programs. Investors can find additional information about digital asset and crypto investment schemes, including the warning signs of fraud, at Investor.gov.
For more information on this topic:
- Investor Alert: Watch Out for Fraudulent Digital Asset and “Crypto” Trading Websites
- ICO – Howeycoins
Source: U.S. Securities and Exchange Commission