The regulator claims that between October 2018 and September 2022, BKCoin CEO Kevin Kang raised about $100 million from 50 investors. He assured them that the funds would be invested in crypto assets for subsequent profit. However, it turned out that the project worked according to the scheme of a financial pyramid, and $3.6 million were spent on payments to new investors.
The SEC complaint also states that instead of investing in cryptocurrencies, Kang embezzled about $371,000 of user funds, spending them on buying an apartment in New York and tickets to sports events.
Kang attempted to cover up the unauthorized use of funds by providing falsified data to investors with inflated bank account balances. He also provided investors with the false information that his company was audited by “one of the best auditors”, when in fact BKCoin never applied for the services of audit companies.
“Investors have entrusted their money to this firm to trade crypto assets. Instead, the defendants illegally used their money, forged documents, and even created a pyramid scheme. This speaks to the increased need to protect investors from securities fraud, which also applies to crypto assets, ”said Eric I. Bustillo, head of the SEC regional office in Miami.
Recall that in February, the regulator filed a lawsuit against Terraform Labs and its founder Do Kwon for organizing a fraud that caused investors multi-billion dollar losses.
Source: Bits
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