The SEC just charged 5 people with scamming $45 million from investors by promising unique blockchain tech that would be sold for trillions of dollars
- The SEC charged five people and two businesses with scamming investors out of $45 million.
- The investment scheme promised impossibly high returns based on the trillion-dollar sale of blockchain technology.
- The alleged scammers used the $45 million to buy cars, real estate, and a boat.
Another alleged crypto scam was revealed on Wednesday when the Securities and Exchange Commission charged a group of individuals and several businesses with defrauding investors out of $45 million.
According to the SEC, CoinDeal was an investment scheme that promised tens of thousands of investors insane returns through the sale of blockchain technology that would net trillions of dollars.
Neil Chandran and others allegedly sold unregistered securities as part of the scheme, promising investors "extravagant" returns related to a unique blockchain technology called CoinDeal, which would ultimately be sold to a wealthy group of buyers for an eye-popping sum in the trillions.
From at least January 2019 to 2022, the alleged fraudsters disseminated false and misleading statements to investors about the value of CoinDeal, the supposed sale of the blockchain, and the use of investment proceeds. In reality, the alleged fraudsters used the money raised from the investment scheme to buy cars, real estate, and a boat.
"We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors," said Daniel Gregus, Director of the SEC's Chicago Regional Office. "As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors."
In June 2022, the Department of Justice indicted Chandran on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds for his involvement in CoinDeal.
Others charged in the CoinDeal scheme include Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc., Banner Co-Op Inc., and BannersGo, LLC. The SEC complaint includes violations of antifraud and registration provisions of the Securities Act and Exchange act.
Chandran even went so far as to claim that the United States Department of Homeland Security was in on the supposed multi-trillion dollar deal for CoinDeal.
The SEC complaint said, "Chandran typically provided status updates on the supposed deal, including but not limited to: the involvement of foreign central banks and the United States Department of Homeland Security; the latest board meetings of the consortium of wealthy buyers; the role of certain political figures; and the causes of 'temporary' delays to the sale closing. These updates were designed to lull investors and induce them to continue investing in CoinDeal."
The payout tables used by Chandran were so ridiculous it's almost impossible to comprehend how he was able to lure tens of thousands of investors into the deal. For example, according to the SEC complaint, Chandran told prospective investors that a $100,000 investment into CoinDeal would return $56.25 billion and a Bentley GT Convertible, while on the low end of the scale, a $500 investment would generate a return of $12.5 million.
Excuses made by Chandran to CoinDeal investors for why the multi-trillion dollar deal was not closing as expected included "the engineer... called in sick yesterday."