The US Securities and Exchange Commission (SEC) has charged two brothers with running a $60 million Ponzi scheme.
It is noteworthy 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 fraud case
According to the regulator presentationJonathan Adam and his brother Tanner Adam defrauded more than 80 people by falsely claiming to operate a cryptocurrency bot that promised a 13.5% monthly return to anyone who invested money in it.
Between January 2023 and June 2024, the two deceived investors by claiming that their bot could identify arbitrage opportunities on different platforms. They promised that investors’ funds would be placed in a lending pool to finance flash loans and execute transactions, with assets borrowed and returned within a single blockchain transaction.
But according to Justin Jeffries, associate director of enforcement at the SEC’s Atlanta regional office, the bot was entirely fictitious. Instead of making trades, the brothers allegedly squandered $53.9 million of the $61.5 million raised. They funded extravagant lifestyles, including the purchase of luxury cars and SUVs and the construction of a $30 million condominium.
The regulator says the Adams brothers assured users of the system that the risk was “virtually non-existent” unless there was a global market crash. Jonathan also allegedly misled his sponsors by concealing his background, including three previous convictions for securities fraud.
To stop the scheme, the SEC secured an emergency freeze on the assets of the brothers’ companies, GCZ Global LLC and Triten Financial Group LLC.
The agency has therefore charged Jonathan and Tanner with violating the antifraud provisions of the federal securities laws. They are seeking permanent injunctive relief against their companies, the return of all investor funds and civil penalties.
Notably, Jonathan invoked the Fifth Amendment in response to a subpoena issued by the financial watchdog during its investigation. Meanwhile, Tanner did not produce 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 cryptocurrencies directed to scam-related addresses abandonment by $1.5 billion, down 11% from $13.9 billion in 2022 to $12.5 billion. Ponzi and pyramid schemes remained the largest fraud subcategories that year.
Recently, the SEC loaded NovaTech Ltd. and its directors, Cynthia and Eddy Petion, were convicted of defrauding more than 200,000 people. Investors were told their money would be placed in secure cryptocurrency and foreign exchange markets and that they would receive profits, which never happened.
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