US SEC Files Lawsuit Against Owner of Alleged Cryptocurrency Ponzi Scheme:
The US Securities and Exchange Commission (SEC) has filed a lawsuit against two advisory companies and their owner for running a cryptocurrency ponzi scheme.
The firms existed for over four years and manage to raise about $4.4 million.
The lawsuit is against Creative Advancement LLC and Edelman Blockchain Advisors LLC with their owner – Gabriel Edelman.
As indicated in the Lawsuit, Edelman, through his companies, “fraudulently offered and sold securities, using false, misleading statements” from February 2017 to May 2021.
The SEC believes he raised $4,390,000 from at least four investors within the four years of operation.
Edelman promised investors that these funds will be invested into cryptocurrencies, which would have been purchased at discounted prices.
However, the Commission alleged he invested “only a small portion of investor funds in digital assets” and used the majority to fund his “own personal benefit,” including paying off credit cards or sending money to family members.
Most importantly, the SEC claimed that Edelman operated a “Ponzi-like” crypto scheme, repaying early investors with some of the new investors’ funds to “encourage their ever-larger investments” to propagate scam.
Also, the agency’s lawsuit indicated that Edelman committed securities fraud and requested the court to permanently prohibit him from “engaging in the acts, practices, and courses of business alleged herein.”
According to SEC lawsuit, Edelman is allegedly residing in Spain, and the agency narrated how one of his Ponzi-like trick worked;
For example, one Investor initially invested $50,000. Edelman returned $75,000 within a few months, and the Investor subsequently invested an additional $600,000. Edelman then returned $720,000 a few months later. After that, the Investor invested $1,000,000–based on purported past performance and Edelman’s promise that the Investor would receive a 15% return. Thereafter, Edelman did not return any funds to that Investor.