The U.S. Securities and Exchange Commission (SEC) has filed charges against two brothers for allegedly orchestrating a $60 million cryptocurrency Ponzi scheme centered around a fraudulent trading bot.
The charges were detailed in a complaint filed on August 26 in the U.S. District Court for the Northern District of Georgia, Atlanta.
According to the SEC, Jonathan Adam and Tanner Adam lured more than 80 investors by promoting a non-existent crypto trading bot that they claimed could deliver impressive monthly returns of 13.5%.
Crypto Arbitrage Trading Bot
The brothers allegedly operated the scheme from January 2023 through June 2024.
They managed to convince investors that their bot could identify arbitrage opportunities across various crypto platforms, allowing it to buy and sell assets simultaneously and profit from minor price differences in different markets.
The SEC’s complaint states that the brothers promised to pool investor funds into a lending system to facilitate flash loans and execute trades, with the borrowed assets being returned within the same blockchain transaction.
However, the SEC contends that the trading bot was a complete fabrication.
Justin Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, declared that the entire trading scheme was fraudulent.
According to Jeffries, the brothers misappropriated $53.9 million of the $61.5 million they raised from investors.
While some investors received partial repayments, the majority of the funds were allegedly used to finance the brothers’ extravagant lifestyles, including the purchase of luxury vehicles and the construction of a $30 million condominium.
“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” Jeffries stated.
In response to the SEC’s actions, the agency has successfully obtained emergency asset freezes on the brothers’ companies, GCZ Global, LLC, and Triten Financial Group LLC, in an effort to halt the fraudulent scheme.
The SEC also accused Jonathan Adam of misleading investors by concealing his criminal past, which includes three prior convictions for securities fraud.
The agency is now pursuing permanent injunctions against the brothers and their companies, the return of all misappropriated funds, and civil penalties.
FutureNet Co-Founder Arrested
Last week, Montenegrin authorities apprehended Roman Ziemian, co-founder of the alleged crypto fraud scheme FutureNet, which is accused of defrauding investors of approximately $21 million.
The arrest was made in the capital city of Podgorica, where Ziemian was reportedly living under a false identity.
Ziemian is wanted by both South Korean and Polish authorities on charges of fraud, money laundering, and theft.
Ziemian’s case bears similarities to that of Do Kwon, co-founder of Terraform Labs, who is also detained in Montenegro and faces similar charges.
Earlier this month, Kwon’s extradition was postponed again after the Supreme State Prosecutor’s Office (VDT) filed a request for the protection of legality.
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