The U.S. Securities and Exchange Commission Charged Two Brothers with Operating a Ponzi Scheme Related to Fake Crypto Trading Bot
The SEC accuses Jonathan Adam and his brother Tanner Adam of luring more than 80 investors across the country by promising 13.5% monthly returns via a crypto asset lending pool.
- The regulator says the brothers claimed to have developed an automated bot that identified crypto arbitrage trading opportunities.
- The brothers allegedly said the bot used smart contracts to provide "flash loans" out of the lending pool to fund arbitrage traders.
- However, the SEC says the lending pool didn't actually exist, accusing the brothers of using at least $53.9 million worth of the victims’ money to pay off earlier investors, interest and finders’ fees and make personal purchases.
- Tanner Adam allegedly siphoned investor funds to make payments towards building a $30 million condominium in Miami, and Jonathan allegedly used at least $480,000 to buy a fleet of cars, trucks and recreational vehicles.
- The SEC also alleges that Jonathan Adam hid the fact that he had been convicted of three counts of securities fraud from investors.
- The regulator obtained an emergency asset freeze against the brothers and charged them with violating the antifraud provisions of federal securities laws.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets.