The crimes in the crypto sector around the globe have been consistently increasing, concerning regulators, lawmakers and participants fairly.
In a recent revelation, the Securities and Exchange Commission (SEC) charged four individuals and accused them of building and promoting a platform to execute fraudulent practices with worldwide reach.
The agency has arrested the individuals named Francisley Valdevino Da Silva, Juan Antonio Tacuri Fajardo, Ramon Antonio Perez Arias, and Jose Ramiro Coronado Reyes, who were involved in spreading malpractices. The individuals created a platform, namely Forcount Trader Systems Inc., which was a fraudulent crypto asset pyramid scheme.
A pyramid scheme is a fraudulent system of making money based on recruiting an ever increasing number of investors. The initial promoters recruit investors, who in turn recruit more investors, and so on. It is called a pyramid scheme as at each level, the number of investors increases.
As per SEC, the platform had deceived hundreds of retail investors, primarily the residents of Spanish-speaking communities throughout the United States and other countries. The platform reportedly raised over $8.4 million by defrauding investors.
The complaint lodged by the regulatory body implies that Da Silva, a Brazilian national, and U.S.-based members, i.e.,Tacuri, Perez, and Coronado, have frauded investors from July 2017 to November 2020. They lured and deceived investors by promising them guaranteed returns from investments in “memberships” in the Forcount Traders Systems.
Reportedly, these memberships were said to yield investors’ interest in profits from Forcount’s apparent crypto asset trading and mining operations. The investors were also offered participation in Forcount’s referral program, which, as stated in the complaint, was a scheme to increase the client base and sell new memberships.
The complaint accuses the alleged individuals were aware that Forcount had no crypto services and that if they were not aware, they were too reckless to be promoting it ahead. The report reveals that Forcount had no crypto asset trading and neither any mining operations, and the only objective of the scheme was to increase the investor base.
A deeper investigation reveals that the accused exploited the investors’ funds and accelerated Forcount’s collapse by buying properties like homes, cars, luxury goods, etc.
The investigation is carried out by Shannon Keyes and Christopher Mele from New York’s regional office of the SEC. Thomas P. Smith, Co-Acting Regional Director of the New York Regional Office of the SEC, said that:
“As the complaint alleges, Da Silva, Tacuri, Perez, and Coronado deceived investors, most of whom were members of Spanish-speaking communities, with false promises of high returns on crypto-asset related investments.”
The SEC executive also counted on the agency’s mission to protect investors’ interests from fraudulent practices and schemes. He said:
“Protecting investors from fraudulent pyramid schemes where promoters pitch high returns and complex commission structures is part of the SEC’s mission to make markets fair and open to all.”
Sources reveal that the SEC’s complaint has been filed in the federal district court and has sanctioned several charges on the accused. The charges placed on the defendants include violating the anti-fraud and registration provisions of the federal securities laws.
It also seeks permanent injunctive relief, conduct-based injunctions preventing the accused from participating in multi-level marketing or crypto asset offerings, disgorgement of ill-gotten gains and prejudgment interest, civil penalties, and officer-and-director bars.
Simultaneously, criminal charges on Da Salvi and Tacuri have been approved by the U.S. Attorney’s Office for the Southern District of New York.
The SEC in recent times, is trying to be more rigid with the regulation of crypto. On December 8, the SEC’s Division of Corporation Finance issued a warning to publicly traded U.S. corporations concerning recent bankruptcies and financial difficulty among participants in the market for crypto assets, which have substantially disrupted those markets.
They implied that listed corporations could be required to disclose, in accordance with federal securities rules, the direct or indirect effects of recent events in the crypto sector on their operations and their balance sheet.
Crimes in the name of crypto across the globe are becoming more prevalent these days. In November, Todayq News reported that the judicial system in Dubai prosecuted a criminal duo accused of scamming, torturing, and stealing from investors. The group reached out to investors and asked them to invest in a crypto investment scheme.