SEC accuses BKCoin and its co-founder of undertaking $100 million scam

    Simar Marwaha
    Simar Marwaha
    Published on March 12, 2023 05:40 AM

    SEC filed an emergency action against Miami-based BKCoin Management LLC and its Co-Founder Kevin Kang, alleging that they had cheated investors out of $100 million through a bogus cryptocurrency scam.

    SEC accuses BKCoin and its co-founder of undertaking a $100 million scam
    Source: Medium

    The Miami-based financial adviser company BKCoin Management LLC and its co-founder Kevin Kang are the targets of an emergency action brought by the US Securities and Exchange Commission (SEC), which alleges that they duped investors out of $100 million through a fraudulent cryptocurrency scam. The company is targeted for financial fines, and Kang is targeted for a conduct-based injunction.

    The US securities regulator said in a recent news statement that between October 2018 and September 2022, BKCoin raised almost $100 million from at least 55 investors. Customers were persuaded by the business and Kevin Kang, one of its founders, that their money would be utilized to trade cryptocurrencies in exchange for high profits.

    Instead, the SEC said that the defendants ignored the described strategy, with Kang allegedly stealing over $370,000 to pay for vacations, sporting event tickets, and even a house in New York City, while the defendants used $3.6 million of the entire amount to make Ponzi-like payments. According to the lawsuit, BKCoin misled consumers by claiming to get an audit opinion from one of the "top four auditors" when, in reality, it never did.

    “As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct. This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena,” Eric I. Bustillo – Director of the SEC’s Miami Regional Office – stated.

    Certain BKCoin assets were frozen by the watchdog as part of the emergency measure. It demanded permanent injunctions against both the business and Kang, alleging that they had broken the federal securities laws' anti-fraud provisions. Bison Digital LLC, a virtual asset service provider that allegedly collected $12 million from BKCoin, was also sought out for disgorgement by the lawsuit.

    Preceding SEC Action

    The regulator accused eight people, including Neil Chandran, and multiple organizations of stealing $45 million from investors via the use of the fictitious cryptocurrency scam CoinDeal. It stated that the suspects bought homes, automobiles, and a yacht with the money.

    “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.

    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,” Daniel Gregus – Director of the SEC’s Chicago Regional Office – commented.

    Chandran has already encountered legal troubles. He was previously detained by the US Department of Justice for crimes involving wire fraud and managing illicit financial transactions while working for CoinDeal. The SEC claimed that as a result, he should be the target of a conduct-based injunction.

    Crypto regulation will be significantly impacted by this fraudulent activity in the domain of cryptocurrencies.