SEC Announces Emergency Action on Alleged BKCoin $100 Million Crypto Fraud Scheme
On March 6th, 2023, the Security and Exchange Commission (SEC) announced they secured an emergency action to freeze the assets of BKCoin Management LLC and its owner and operator Kevin Kang. The SEC alleges BKCoin ran a Ponzi-like cryto asset management fraud, using $100 million in investor funds to pay investors “returns”, and misusing investor funds to pay for expensive vacations, tickets, and apartment rentals.
BKCoin Alleged to Have Misused Funds
The SEC alleges that BKCoin and its operator raised $100 million in cash and assets from dozens of investors, offering to manage crypto assets and pay investors returns through multiple private funds. However, according to the SEC, the fund began to pay investors using incoming funds, like a Ponzi scheme, ultimately distributing $3.6 million in investors funds relabeled as returns.
Allegations include comingling assets of the company with investor funds, and using several hundred thousand dollars of investor funds to pay for personal purchases such as vacations, tickets to events, and rent on a New York apartment. Further, the allegations include attempts to cover up the misuse of funds through false bank statements.
Eric Bustillo, Miami Regional Office Director: “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.”
The complaint is filed in the United States District Court for the Southern District of Florida. The complaint seeks the disgorgement of investor funds, penalties, and permanent injunctions of both the company and its director. They also seek the return of $12 million given to another entity, Bison Digital LLC. A copy of the complaint can be seen here.
Cryptocurrency Legal News
The news about the SEC allegations against BKCoin come after continuing news of criminal charges and investigations into cryptocurrency products and exchanges.
After the rapid collapse of FTX, a former co-founder of FTX pleaded guilty to six criminal charges in late February. The former director of FTX engineering is expected to cooperate in the case against FTX, Alameda, and founder Sam Bankman-Fried. The charges included three counts of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering and conspiracy to defraud the United States through campaign finance violations. Sam Bankman-Fried, the other co-founder and former CEO of FTX , has pled not guilty and currently faces a total of twelve charges.
The SEC announced last month that former basketball star Paul Pierce agreed to pay $1.4 million to settle allegations he violated anti-touting federal security laws when he promoted EthereumMax. Kim Kardashian previously settled for $1.26 million on similar allegations of improper promotion of EthereumMax tokens. The SEC continues many other high profile cryptocurrency cases, including fraud charges against Terraform Labs CEO Do Kwon regarding the collapse of Terra and Luna cryptocurrencies.
Cryptocurrency Fraud and Manipulation
Schneider Wallace continues to monitor this industry, as well as represent classes of investors and users harmed by cryptocurrency fraud or manipulation. If you wish to discuss a cryptocurrency loss after manipulation or fraud, please contact our attorneys at 1-800-689-0024 or firstname.lastname@example.org.