Ponzi

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The United States Securities and Exchange Commission (SEC) has charged two brothers, Jonathan and Tanner Adam, for allegedly orchestrating a $60 million Ponzi scheme that promised investors extraordinary returns through a crypto trading bot that never existed. The SEC’s complaint, <a href="https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-107.pdf" rel="noopener noreferrer nofollow">filed</a> on August 26 in the U.S. District Court for the Northern District of Georgia, details how the brothers duped over 80 investors by claiming their bot could generate a staggering 13.5% monthly return.
<h2 id="span-style-font-weight-400-details-span">Details</h2>
<a href="https://www.sec.gov/newsroom/press-releases/2024-107" rel="noopener noreferrer nofollow">According</a> to the SEC, the alleged scheme ran from January 2023 to June 2024. The Adams reportedly convinced investors that their bot could exploit arbitrage opportunities in the cryptocurrency market by simultaneously buying and selling assets across different platforms, capitalizing on minor price discrepancies.
They claimed that investor funds would be pooled to finance <a href="https://thecoinrise.com/avalanche-based-nereus-finance-suffers-flash-loan-attack/" rel="noopener noreferrer nofollow">flash loans</a>, where the borrowed assets would be returned in the same blockchain transaction, ensuring virtually risk-free profits.
However, the SEC asserts that the entire operation was a sham. Justin Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, stated that the trading bot was a complete fabrication. Instead of deploying investor funds as promised, the brothers allegedly misappropriated $53.9 million of the $61.5 million they raised.
<h2 id="span-style-font-weight-400-illicit-amount-to-fund-lavish-lifestyle-span">Illicit Amount to Fund Lavish Lifestyle</h2>
While some investors received partial returns, the majority of the funds were reportedly used to finance Adams’ extravagant lifestyle, including the purchase of luxury vehicles, recreational trucks, and the construction of a $30 million condominium.
“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” Jeffries stated.
The SEC has moved swiftly to halt the scheme, securing emergency asset freezes on the brothers’ companies, GCZ Global, LLC, and Triten Financial Group LLC. The agency also highlighted that Jonathan Adam misled investors by concealing his criminal past, which includes three prior convictions for securities fraud. The SEC has charged both brothers with violating antifraud provisions of federal securities laws.
<h2 id="span-style-font-weight-400-rise-in-ponzi-schemes-span">Rise in Ponzi Schemes</h2>
Ponzi schemes have been increasingly prevalent in the crypto space. In 2022, blockchain intelligence firm TRM Labs <a href="https://www.trmlabs.com/illicit-crypto-ecosystem-report-2023" rel="noopener noreferrer nofollow">reported</a> that an alarming <a href="https://thecoinrise.com/over-7-8b-lost-to-crypto-ponzi-schemes-in-2022-report/" rel="noopener noreferrer nofollow">$7.8 billion was lost to crypto pyramid and Ponzi schemes</a>.
In May this year, a <a href="https://thecoinrise.com/manhattan-resident-arrested-for-alleged-43m-crypto-ponzi-scheme/" rel="noopener noreferrer nofollow">Manhattan resident was accused of wire fraud</a> in an alleged Ponzi scheme, causing investors a loss of at least $43 million.&nbsp;
The post <a href="https://thecoinrise.com/sec-charges-brothers-in-60m-crypto-ponzi-scheme-involving-fake-trading-bot/" rel="noopener noreferrer nofollow">SEC Charges Brothers in $60M Crypto Ponzi Scheme Involving Fake Trading Bot</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.

SEC Charges Brothers in $60M Crypto Ponzi Scheme Involving Fake Trading Bot

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