SEC Sues Crypto Companies for Fund Mismanagement

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A statement in SEC’s filing, says: “Defendants falsely told investors that their funds would be invested in digital assets that, defendants claimed, they could obtain at a discount.  However, defendants did not intend to carry through on their promises and, in fact, invested only a small portion of investor funds in digital assets.”

On Thursday, the US Securities and Exchange Commission (SEC) sued two crypto companies and their owner for misusing investors’ funds that were supposed to be invested in digital assets.

The charges, filed in the Federal District Court in Manhattan, state that creative Advancement LLC, Edelman Blockchain Advisors LLC, and their owner, Gabriel Edelman, generated $4.3 million trading securities to four investors. The complaint alleges that this trading was done between February 2017 and May 2021 using “false and misleading statements.”

The statements include promises made by Edelman to invest the funds in digital assets, whereas he used it for his interest. 

According to a statement made in SEC’s filing,

“Defendants falsely told investors that their funds would be invested in digital assets that, defendants claimed, they could obtain at a discount.  However, defendants did not intend to carry through on their promises and, in fact, invested only a small portion of investor funds in digital assets.”

The charges also allege Edelman indulged in Ponzi-like activities by sending false profits to some investors to motivate them to make bigger investments. It referred to these investors as elderly persons with little knowledge of crypto.

As a result, the Securities and Exchange Commission (SEC) is demanding court orders to stop the firms’ operations and make them release their profits from the fraudulent transactions.

This action by SEC will be the second time they are going after rule breakers in the crypto space in a week.

Recall on Wednesday that SEC, led by Chairman Gary Gensler, sued a Chicago-based crypto firm for falsely trading $1.5 million in unregistered tokens and giving false information to the investors.

This happened after Gensler announced that most cryptocurrencies are “securities,” which fall under the SEC jurisdiction. In a different interview, he stated that crypto companies employing the staking mechanism might also become securities if confirmed by the Howey test.

We're glad you read to this point!

Every week, we publish an email newsletter highlighting all the juicy stories we covered in the crypto space, bringing all the major happenings to your doorstep.

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Written by
Chiagoziem Bede Ikwueze

A statement in SEC’s filing, says: “Defendants falsely told investors that their funds would be invested in digital assets that, defendants claimed, they could obtain at a discount.  However, defendants did not intend to carry through on their promises and, in fact, invested only a small portion of investor funds in digital assets.”

On Thursday, the US Securities and Exchange Commission (SEC) sued two crypto companies and their owner for misusing investors’ funds that were supposed to be invested in digital assets.

The charges, filed in the Federal District Court in Manhattan, state that creative Advancement LLC, Edelman Blockchain Advisors LLC, and their owner, Gabriel Edelman, generated $4.3 million trading securities to four investors. The complaint alleges that this trading was done between February 2017 and May 2021 using “false and misleading statements.”

The statements include promises made by Edelman to invest the funds in digital assets, whereas he used it for his interest. 

According to a statement made in SEC’s filing,

“Defendants falsely told investors that their funds would be invested in digital assets that, defendants claimed, they could obtain at a discount.  However, defendants did not intend to carry through on their promises and, in fact, invested only a small portion of investor funds in digital assets.”

The charges also allege Edelman indulged in Ponzi-like activities by sending false profits to some investors to motivate them to make bigger investments. It referred to these investors as elderly persons with little knowledge of crypto.

As a result, the Securities and Exchange Commission (SEC) is demanding court orders to stop the firms’ operations and make them release their profits from the fraudulent transactions.

This action by SEC will be the second time they are going after rule breakers in the crypto space in a week.

Recall on Wednesday that SEC, led by Chairman Gary Gensler, sued a Chicago-based crypto firm for falsely trading $1.5 million in unregistered tokens and giving false information to the investors.

This happened after Gensler announced that most cryptocurrencies are “securities,” which fall under the SEC jurisdiction. In a different interview, he stated that crypto companies employing the staking mechanism might also become securities if confirmed by the Howey test.

We're glad you read to this point!

Every week, we publish an email newsletter highlighting all the juicy stories we covered in the crypto space, bringing all the major happenings to your doorstep.

So, if you want to have top stories delivered to your email inbox every week, subscribe to our newsletter!

Written by
Chiagoziem Bede Ikwueze