CoinDeal Fraud: Eight Defendants Charged by SEC for Crypto-Related Securities
SEC alleges defendants raised over $45 million through fraudulent CoinDeal investment offering"
The U.S. Securities and Exchange Commission (SEC) on Thursday sued eight individuals and companies for securities fraud and the sale of unregistered securities.
The agency accused the defendants, Neil Chandran, Garry Davidson, Michael Glaspie, Linda Knott, Amy Mossel, Banner Co-Op, Inc., BannersGo, LLC, and AEO Publishing of bilking investors in several states of over $45 million through their offering of CoinDeal investments.
The SEC charged that the gang recruited investors at teleconferences, in online posts, and by email without considering their sophistication or accreditation status. The defendants represented that the funds raised would cover CoinDeal's operating expenses, but the investors had no control or authority over the company's operations. Chandran ultimately controlled CoinDeal and investors relied on his and Davidson's managerial skills, along with Davidson, Glaspie, and Knot,t to provide a return on their investment, it said.
The SEC claimed that the CoinDeal investments the scammers sold were securities and that they hadn't registered them. The SEC wants permanent injunctive relief, disgorgement, and civil penalties against the defendants.
The SEC has recently taken several actions against cryptocurrency scams.
As far back as 2017, the SEC warned investors about the potential risks of investing in initial coin offerings (ICOs), a form of cryptocurrency-based crowdfunding. The warning stated that many ICOs may be subject to federal securities laws and that investors should be cautious before investing in ICOs.
Since then, the SEC has taken several enforcement actions against cryptocurrency scams.
In 2018, the SEC filed charges against the founders of Centra Tech, a company that raised millions of dollars through an ICO, for fraud and selling unregistered securities. In 2019, the SEC charged the founders of Crypto Asset Management with operating a fraudulent cryptocurrency investment fund. In 2020, the SEC took action against several companies and individuals for operating cryptocurrency-related Ponzi schemes, including OneCoin and BitConnect.
The SEC has also charged several individuals with operating fraudulent ICOs, including Maksim Zaslavskiy and Sohrab Sharma.