U.S. SEC Shutters Ponzi Diamond-Backed Cryptocurrency Business
The U.S. Securities and Exchange Commission (SEC) on May 21, 2019, obtained an emergency order to halt the operations of an ongoing $30 million cryptocurrency Ponzi scheme.
Necessary Safety Measures
The U.S. SEC recently delayed the decision on VanEck’s Bitcoin ETF proposal once again and it’s not hard to guess the possible reasons behind it. Although the crypto industry is maturing at an impressive rate – scams, frauds, and Ponzi schemes that exploit the average Joe’s lack of knowledge about the nascent space are still commonplace.
In a press release issued May 21, the U.S. SEC declared that it had obtained a court order against a diamond-related initial coin offering (ICO) scheme which is suspected to have conned more than 300 people across the U.S. and Canada.
The SEC has levied charges against South Florida-based cryptocurrency business venture Argyle Coin LLC and its principal Jose Angel Aman for allegedly mishandling clients’ funds to finance a large-scale Ponzi scheme.
The watchdog recently approached the U.S. District Court for the Southern District of Florida in relation to the sophistically woven scam being perpetrated through Argyle Coin. On May 20, 2019, the court agreed to the SEC’s request and issued a temporary restraining order and a temporary asset freeze against Argyle Coin, Aman, and other entities suspected of partaking in the fraudulent scheme.
A Classic Case of a Ponzi Scheme
The SEC in its complaint alleged that Aman used Argyle Coin as an investment vehicle to execute his well-thought-out plan to trick innocent investors. The firm used its new investments to pay out prior customers the promised returns, the press release noted.
Throughout the dirty process, Aman was supported by fellow crypto criminals Harold Seigel and Jonathan H. Seigel who also happen to be stakeholders in his other business ventures, namely, Natural Diamonds Investment Co. And Eagle Financial Diamond Group Inc. (Eagle.)
According to the complaint, the accused enticed innocent investors to invest in Argyle Coin by falsely claiming that the investment was completely risk-free as it was collateralized against “fancy colored diamonds.” The criminals also assured the investors that their money would be invested in the cryptocurrency business.
In reality, however, the felons mishandled clients’ funds worth more than $10 million to return the promised returns to old investors and to finance Aman’s personal expenses, including his house rent, purchase of horses, and the fee for his son’s horse-riding lessons.
Commenting on the matter, Eric I. Bustillo, Director of the SEC’s Miami Regional Office said:
“As alleged, Aman operated a complicated web of fraudulent companies in an effort to continually loot retail investors and perpetuate the Ponzi schemes as well as divert money to himself. The SEC’s diligent investigative work uncovered the Ponzi schemes and our goal is to bring justice to the harmed investors.“