The United States Securities Exchange Commission (SEC) has charged three individuals for orchestrating two crypto-related schemes worth more than £8.03 million. SEC unveiled this news through a press release on February 1, noting that the accused conducted fraudulent and unregistered digital asset securities offerings through two companies, namely Start Options and Bitcoiin2Gen. Through these offerings, the accused proceeded to defraud hundreds of retail investors out of their hard-earned money.
According to the news release, the authority filed a complaint with the U.S. District Court for the Eastern District of New York. Per the filing, the scheme was active for around six months, seeing as it started in December 2017 and ended in May 2018. During this period, Kristijan Krstic, the founder of the two companies, and John DeMarr, the main US-based promoter of the firms, lured investors into buying digital asset securities.
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Reportedly, Krstic and DeMarr praised Start Options’ crypto mining and trading platform from December 2017 to January 2018. They allegedly claimed that Start Options was the largest Bitcoin exchange, regarding euro volume and liquidity. Apart from this, the duo asserted that independent news media consistently rated the platform as the best and most secure Bitcoin exchange.
B2G token sale
In the press release, the SEC went on to note that Krstic and DeMarr started promoting Bitcoiin2Gen’s unregistered initial coin offering (ICO) in January 2018. The ICO involved the sale of digital asset securities known as B2G tokens. At this stage, another individual, Robin Enos, began working with DeMarr by drafting fraudulent promotional materials and distributing them to the general public. The materials allegedly comprised multiple false statements, including that the tokens would be issued through the Ethereum blockchain.
The trio also promised investors that they would leverage the invested funds to create a mineable coin, which would be tradeable on the Smart Options platform starting April 2018. However, none of these plans came into actualization, and Krstic and DeMarr used the invested funds for personal gains.
To this end, the SEC charged Krstic and DeMarr with going against the antifraud and registration provisions of the federal securities laws. The regulator then charges Enos with aiding and abetting the violation of antifraud laws. The complaint seeks injunctive relief, disgorgement plus interest, penalties, and an officer-and-director ban against Krstic and DeMarr.