The U.S. SEC has filed an emergency action against BKCoin Management LLC and its principal, Kevin Kang, for allegedly orchestrating a $100 million crypto fraud scheme.
The SEC obtained an asset freeze, appointment of a receiver, and other emergency relief against the Miami-based investment adviser and Kang in connection with the crypto asset fraud scheme.
SEC: BKCoin and Kang made $3.6 million in Ponzi-like payments
According to the SEC’s complaint, BKCoin raised around $100 million from at least 55 investors to invest in crypto assets from October 2018 to September 2022. BKCoin and Kang allegedly used some money to make Ponzi-like payments and for personal use instead of investing in crypto assets, as they promised investors.
The complaint, which also recently launched an investigation on lido, alleges that BKCoin and Kang disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors.
It also alleges that Kang misappropriated at least $371,000 of investor money for personal use, including vacations, sporting event tickets, and a New York City apartment.
Kang tried to hide the inappropriate use of investor money by providing cooked audits with inflated bank reserve accounts to the third-party administrator for certain funds.
The watchdog further stipulates that BKCoin tricked some investors and that BKCoin, or one of the funds, received validation from a “top four auditor,” which was not the case.
SEC requests Bison Digital LLC to give back funds
The lawsuit filed by the SEC demands permanent injunctions against BKCoin and Kang, disgorgement, prejudgment fees, a civil fine from both defendants, and an officer and director ban for Kang, in addition to a conduct-based injunction.
The complaint names relief defendants and seeks disgorgement from each of the funds and Bison Digital LLC, which allegedly received around $12 million from BKCoin and the funds.
The SEC’s current investigation is led by Glenn S. Gordon, Jessica M. Weissman, and Fernando Torres in the Miami Regional Office, with support from James Richardson, Jean Cabot, and Adrian Gonzalez. Under Teresa Verges’s direction, Pascale Guerrier is in charge of litigation for the SEC.
This latest SEC action reminds investors to exercise caution when investing in crypto assets and to be vigilant against fraudsters who take advantage of the growing popularity of digital assets.
The SEC has issued Investor Alerts on Digital Asset and Crypto Investment and Pyramid Schemes Posing as Multi-Level Marketing Programs, guiding investors to help them avoid falling prey to fraud. The SEC continues to monitor the crypto asset arena and take enforcement action against bad actors.