SEC files lawsuit over $60 million Crypto Ponzi scheme against Georgia Brothers

The US Securities and Exchange Commission (SEC) has filed charges against two brothers for running a $60 million Ponzi scheme.

It should be noted that the complaint was filed on August 26 in the United States District Court for the Northern District of Georgia in Atlanta.

SEC freezes assets in scam

According to the regulator’s filing, Jonathan Adam and his brother Tanner Adam defrauded more than 80 people by falsely claiming they ran a crypto bot that promised a 13.5% monthly return to anyone who put money into it.

Between January 2023 and June 2024, the two misled investors by claiming their bot could identify arbitrage opportunities on different platforms. They promised that investors’ funds would be placed in a loan pool to fund flash loans and execute transactions, with assets loaned and returned within a single blockchain transaction.

However, according to Justin Jeffries, associate director of enforcement for the SEC’s Atlanta regional office, the bot was entirely fictitious. Instead of trading, the brothers allegedly squandered $53.9 million of the $61.5 million raised. They financed extravagant lifestyles, including buying luxury cars and trucks and building a $30 million condominium.

The regulator claims the Adams brothers assured users of the system that the risk was “virtually non-existent” except for a global market collapse. In addition, Jonathan allegedly misled his backers by concealing his background, including three prior convictions for securities fraud.

To stop the scheme, the SEC secured an emergency asset freeze for the brothers’ companies, GCZ Global LLC and Triten Financial Group LLC.

Consequently, the agency has charged both Jonathan and Tanner with violating the anti-fraud provisions of the federal securities laws. They are seeking permanent injunctions against their companies, the return of all investor funds and civil penalties.

In particular, Jonathan has invoked the Fifth Amendment in response to a subpoena issued by the financial watchdog during its investigation. Meanwhile, Tanner did not file any documents or make himself available to testify in response to the agency’s subpoena.

Ponzi schemes dominate crypto fraud

In 2023, the amount of crypto targeting scam-related addresses decreased by $1.5 billion, an 11% decrease from $13.9 billion in 2022 to $12.5 billion. Ponzi and pyramid schemes remained the top fraud subcategories that year.

Recently, the SEC charged NovaTech Ltd. and its principals, Cynthia and Eddy Petion, for defrauding more than 200,000 people. Investors were told that their money would be put into safe crypto and forex markets and that they would receive profits, which never happened.

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