Authorities worldwide have been actively scrutinizing activities related to the crypto industry and these have often been followed by some serious crackdowns.
The regulating authorities hunt down illicit crypto activities so that further illegal activities and infringement of laws can be prevented.
SEC’s Action Against Cryptocurrency
The Securities and Exchange Commission (SEC) in the US in particular has been taking a robust stance on these crypto-related activities.
Ever since Gary Gensler took office as chairman of SEC, this scrutiny has been even tighter.
Initial coin offerings, digital tokens, and platforms providing unregistered securities have particularly been under fire lately.
In recent times many crypto frauds have been reported and SEC has taken strict action against them.
The purported crypto-related fraud schemes have either been at an individual level or a company has been involved.
The SEC has taken a strict stance and has subjected such fraudulent activities to heavy fines and asset freezing.
The regulator has also strongly recommended that the crypto industry needs more transparency and better regulation.
Since crypto has become so common among people, it must have a proper legal system for checks and balances.
Crypto supporters are now more conscientious about the potential effect on innovation and development of the Crypto market.
BKCoin Crypto Scam
An emergency action was declared by the SEC against BKCoin Management, which is an investment adviser.
Allegedly BKCoin was involved in a sham crypto-related scheme that pushed the SEC to crack down on crypto activities.
BKCoin Management LLC was an investment adviser based in Miami and therefore, fell under the jurisdiction of the SEC.
In the wake of this event, the Commission took emergency action and effectively got an asset freeze.
Along with this it also got an order for the nomination of the receiver in addition to some extra emergency relief.
A principal officer of BKCoin, Kevin Kang was also involved in this scam, therefore, action was also taken against him by SEC.
In four years from 2018 to 2022, the fraud company along with its principal has accumulated funds worth $100 million. This money was collected over the years from roughly fifty-five investors.
These were people investing in crypto assets over the platform. However, little did they know that their investments were being used to make payments similar to those of Ponzi schemes.
What is more intriguing is that this money was also used for personal use by the principals of BKCoin.
Contents of the Complaint
The contents of the complaint revealed that BKCoin assured depositors that their investments would be expended on the trade of crypto assets.
Like all Ponzi schemes, this one also promised returns on investments through individually operated accounts and 5 isolated funds.
BKCoin and its officials failed to follow the established rules and regulations and commingled assets of the investors.
In order to fund investors they made pyramid scheme payments of $3.6 million and above.
In the complaint, it was also revealed that Kevin stole up to $371,000 of the money that was invested by the investors.
This money he allegedly used for stuff like vacations, to purchase tickets for sports events. Moreover he also purportedly purchased an apartment worth a million in New York City.
BKCoin also misrepresented the fact that some of the funds were also audited by the top four auditors. However, this was never the case since neither the investors nor any of the funds went through any such audit.
For many years SEC has been taking a harsh approach toward the cryptocurrency market, thereby threatening its existence.
In 2018, SEC took action against crypto for the very first time and the scrutiny hasn’t stopped since then. It will take a few more crackdowns till the SEC finally settles the issue once and for all.
Many prominent companies have been at the receiving end, however, it’s all to safeguard the interests of investors and banks alike.
It is essential that such crackdowns happen so that the regulators can come up with proper procedures and laws for the crypto industry.