The U.S. Securities and Exchange Commission filed charges against six people and two businesses on Wednesday in the U.S. District Court for the Eastern District of Michigan in connection with an investment scheme called CoinDeal.
Daniel Gregus, Director of the SEC’s Chicago Regional Office implied that the defendants falsely claimed to have access to valuable blockchain technology and that the sale would result in 500,000x returns.
“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors,”
The SEC has filed charges against Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, and Linda Knott for their alleged involvement in the CoinDeal scheme. In addition, the agency charged AEO Publishing Inc, Banner Co-Op Inc, and BannersGo LLC. They are accused of violating the Securities Act and Exchange Act’s anti-fraud and registration provisions.
According to the federal regulator, Chandran owns several companies and defrauded investors out of more than $45 million through middlemen who claimed to be sharing information about a pending deal for the technology, which was known to investors as “CoinDeal.” Chandran is already in jail for another investment fraud prosecution brought by the US Justice Department.
Gregus emphasized that everything was a complex scheme in which the defendants made money while cheating tens of thousands of small-time investors. For example, according to the SEC, the defendants bought boats, houses, and cars with the money they received from the CoinDeal scheme.
“As alleged in our complaint, in reality, this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
The agency asserts that between January 2019 and 2022, the group misled investors by claiming that investing in CoinDeal, which the group marketed as a blockchain technology company, would yield large returns. However, the SEC claims no token distribution or sale occurred in its filing.