The SEC has filed a complaint against BKCoin and its co-founder, accusing them of running a $100 million scam. According to the complaint, the company promised investors huge returns on their investments in a virtual currency called BKCoin, but allegedly used the funds to enrich themselves and pay off early investors. The SEC alleges that the company and its co-founder made false and misleading statements to investors, and failed to register the securities offering with the regulator. The case highlights the risks of investing in virtual currencies, and the need for investors to do their due diligence before committing funds.
Numerous crypto investors have fallen victim to scams, such as BKCoin, resulting in the loss of their funds. In the second quarter of 2022, the DeFi sector alone was hacked for a staggering $678 million, highlighting the inherent risks within the industry as reported by Bitcoinist. Shockingly, these scams can come disguised as official packages, tricking investors into believing they are legitimate. Recently, the US Securities and Exchange Commission has taken legal action against the financial advisory firm, BKCoin, and its co-founder for allegedly defrauding investors, claiming to have stolen $100 million from 55 investors between October 2018 and September 2022. The defendants claimed they would use investors’ funds to trade crypto for significant returns on their investment, providing false audit opinions from a top-four auditor. Instead, the defendants used $3.6 million to pay off their own Ponzi scheme model, and co-founder Kang purportedly benefited from misappropriated funds to indulge his interests, such as purchasing properties and sporting event tickets. Following the emergency action, the commission has frozen assets under BKCoin, accusing the defendants of violating federal securities laws on fraud, and it seeks a permanent injunction, together with disgorgement from Bison Digital LLC for receiving $12 million from BKCoin. In addition to BKCoin, the SEC has taken regulatory action against other fraudulent schemes, such as CoinDeal, where eight individuals were charged for stealing investors’ money for personal expenses. These individuals lied to victims about CoinDeal’s valuation and sale, allegedly involving other companies, from January 2019 to 2022. As previously reported, the SEC also investigated Edelman Blockchain Advisors LLC and Creative Advancement LLC, the owner Gabriel Edelman, for allegedly operating a Ponzi scheme between February 2017 and May 2021, resulting in $4.4 million investor loss.