The Securities and Exchange Commission (SEC) has taken swift action against two brothers accused of orchestrating a $60 million cryptocurrency Ponzi scheme that defrauded over 80 investors in the US.
SEC Charges Brothers in $60 Million Crypto Ponzi Scheme
Jonathan Adam and Tanner Adam, along with their respective companies GCZ Global LLC and Triten Financial Group LLC, are at the center of the SEC's newest emergency asset freeze. The regulatory body alleges that the brothers operated a sophisticated fraud scheme from January 2023 to June 2024, promising investors monthly returns of up to 13.5% through a non-existent crypto bot.
According to the SEC's complaint, the Adam brothers claimed to have developed a proprietary trading tool capable of identifying arbitrage opportunities in cryptocurrency markets. They allegedly told investors their funds would be utilized in a lending poolto facilitate “flash loans” for these arbitrage trades, assuring them that their investments were safe barring a global market collapse.
“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” said Justin C. Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office.
Tanner Adam allegedly used the money to pay off a $30 million Miami condominium, while Jonathan Adam reportedly spent at least $480,000 on various vehicles and recreational equipment. SEC also claims that Jonathan Adam misrepresented his background to gain investor trust, failing to disclose three prior convictions for securities fraud.
The complaint, filed in the US District Court for the Northern District of Georgia, charges the Adam brothers and their companies with violating antifraud provisions of federal securities laws. The SEC is pursuing permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
Not the First, Not the Last
The SEC's actions in recent years demonstrate that the cryptocurrency market is a tempting target for potentially fraudulent trading schemes. As Bitcoin's price rises and adoption grows, more retail investors are eager to profit from cryptocurrencies. Unfortunately, these individuals are increasingly falling victim to scammers.
Earlier this year, the SEC uncovered a crypto Ponzi schemecalled HyperFund that allegedly raised up to $1.89 billion from investors. The agency brought civil and criminal charges against its founder, Xue Lee, for claiming to offer “guaranteed high returns” from supposed crypto asset mining operations and partnerships with Fortune 500 companies.
In mid-August, the Commission imposed a $650 million fine on NovaTech for fraud, further eroding investor confidence in the crypto market. NovaTech exploited victims' religious faith through social media, Telegram, and WhatsApp messages, often in Haitian Creole. The scheme's leader, Cynthia Petion, branded herself as “Reverend CEO” and claimed NovaTech was “God's vision.”
Even more concerning, a July study by Cyvers reveals that only 24% of stolen cryptocurrencies are returned to victims. Three out of four crypto thieves and fraudsters typically escape punishment, having amassed over $1 billion in the first half of the year alone.
This article was written by Damian Chmiel at www.financemagnates.com.
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