SEC Initiates Emergency Action Against BKCoin Over Fraud Scheme

The Securities and Exchange Commission has launched an emergency action against investment advisor BKCoin Management in connection with a $100 million crypto fraud scheme.

According to the SEC, the investment advisor allegedly mixed client funds and used millions to make Ponzi-style payments.

Another SEC appearance

In yet another crackdown, the Securities and Exchange Commission (SEC) announced it would file an emergency action against investment advisor BKCoin Management. According to the SEC, the action was initiated in connection with a $100 million crypto fraud scheme, notably citing co-founder Kevin Kang. The agency also stated that they froze the advisor’s assets, claiming that Miami-based BKCoin Management had raised $100 million from 55 investors to plug it into cryptocurrency.

However, instead of using the funds where they should, the company used them to buy expensive items and make “Ponzi-style payments”. In a press release, the SEC stated:

“The Securities and Exchange Commission announced today that it has filed an emergency action in which it successfully obtained an asset freeze, the appointment of a trustee and other emergency actions against Miami-based investment advisor BKCoin Management LLC and one of its principals, Kevin Kang, in connection with a crypto asset fraud scheme.”

Assets frozen

The SEC also alleged that one of BKCoin Management’s principals, Kevin Kang, had embezzled funds to the tune of $371,000, all of which was investor money, and used it to pay for expensive vacations, an apartment, and forged documents. Eric I. Bustillo, the director of the SEC’s regional office in Miami, stated that the defendants’ actions embezzled funds, created false documents, and engaged in Ponzi-type behavior. The announcement stated,

“As we claim, investors entrusted their money to the defendants to trade crypto assets. Instead, the defendants embezzled their money, created false documents, and even engaged in Ponzi-like behavior. This action underscores our continued commitment to protecting investors and eradicating fraud across all securities industries, including the crypto asset arena.”

The Securities and Exchange Commission also stated that it had already begun asset freezing and other relief efforts against MKCoin Management. The commission now hopes to get a permanent injunction against BKCoin and Kang. It also demands disgorgement, conservatory interest and a civil fine from the defendants. It is also seeking an officer and director ban and conduct-based injunction against Kang. According to the SEC statement,

“The complaint names defendants of assistance and requests a waiver of each of the funds and Bison Digital LLC, an entity that allegedly received approximately $12 million from BKCoin and the funds. The court also granted emergency relief to the defendants, which the SEC requested, including the appointment of a trustee.

A tough attitude

The Securities and Exchange Commission has taken a hard line when it comes to the crypto space in recent years. The commission had begun in 2018 to focus on ICOs, a type of fundraising in crypto, and token sales, which they called unregistered securities sales. Under Chairman Gary Gensler, the SEC has done even more aggressive approach, intensifying the crackdown on crypto. According to Gensler, every coin and token except Bitcoin is an unregistered security.

As a result, several high-profile companies have landed on the SEC’s radar. In January, Genesis and Gemini were both hit with different charges related to offering unregistered securities. Just earlier this month, Kraken was fined $30 million for violating securities laws.

Disclaimer: This article is for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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