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Thursday, June 1, 2023

SEC Files Emergency Action Against Bkcoin in $100 Million Crypto Fraud Scheme

SEC Files Emergency Action Against Bkcoin in $100 Million Crypto Fraud Scheme – Monday, the U.S. Securities and Exchange Commission (SEC) announced it had filed an “emergency action” against Miami-based investment adviser Bkcoin and one of its founders, Kevin Kang, for organizing a $100 million crypto fraud scheme. 

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The securities regulator explained that “it successfully obtained an asset freeze, appointment of a receiver, and other emergency relief” against Bkcoin and Kang. The SEC specified that between at least October 2018 and September 2022, Bkcoin raised roughly $100 million from at least 55 individuals to invest in cryptocurrency assets.

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“Bkcoin and Kang assured investors that their money would be used primarily to trade crypto assets and represented that Bkcoin would generate returns for investors through separately managed accounts and five private funds,” the securities regulator detailed. Adding that: “The defendants disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors.”

The complaint alleges that Kang misused at least $371,000 of investor funds to pay for, among other things, trips, sporting event tickets, and a New York City apartment. Also, “Kang attempted to conceal the unauthorized use of investor money by providing altered documents with inflated bank account balances to the third-party administrator for certain of the funds,” the SEC further said.

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In addition, Bkcoin reportedly misled investors by falsely claiming that the company or one of its funds had obtained an audit opinion from a “top four auditor.” However, neither Bkcoin nor any of its funds actually received an audit opinion at any time.

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The securities regulator stated that Bkcoin and Kang “violated the federal securities laws’ antifraud provisions.” The SEC seeks permanent injunctions, disgorgement, prejudgment interest, and a civil penalty against both defendants. In addition, the complaint seeks an officer and director bar and an injunction based on Kang’s actions.

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