SEC takes emergency action against $100-million fraud scheme operator BKCoin

• The US Securities and Exchange Commission has been on a crypto crackdown streak.
• BKCoin was alleged to have raised $100 million from 55 investors but defrauded them by using the funds for personal expenses.
• Earlier last month, the SEC also sued Terraform Labs and its founder Do Kwon for multi-billion-dollar fraud.

The Securities and Exchange Commission (SEC) has been tailing the crypto market keenly for the last few years. As a result, enforcement actions every now and then have emerged, with the previous three years noting a significant increase in the same. The SEC took another such action this week.

SEC takes down BKCoin

In a press release on Monday, the regulatory body announced the filing of an emergency action against BKCoin Management LLC. The Miami-based investment advisory company, along with its co-founder Kevin Kang, have been alleged to committed fraud against 55 of its investors. According to the SEC, BKCoin raised nearly $100 million from these investors to invest in crypto assets and generate returns. 

However, the founder Kang and the company are being accused by the SEC of using those funds to make Ponzi-like payments and for personal ends.

Furthermore, Kang worsened the situation by attempting to conceal the spending by altering documents and inflating bank account balances. Eric I. Bustillo, Director of the SEC’s Miami Regional Office said,,

“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. This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.”

Through the complaint, the SEC intends to gain permanent injunctions against both of the defendants; disgorgement, prejudgment interest, and a civil penalty. 

SEC charges against Terraform

Despite being nearly a year old at this point, the Terraform Labs and Do Kwon continued to take a beating from the commission. Last month, the SEC charged the company and its founder, Do Kwon, against conducting fraud.

The report stated that the entire company, along with its founder, orchestrated a multi-billion fraud. As per the SEC, Terraform Labs was charged with misleading and deceiving investors. Discussing the charges, the SEC Chair, Gary Gensler, stated,

“We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors… This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”