On August 26, the U.S. Securities and Exchange Commission (SEC) initiated legal action against Jonathan and Tanner Adam, accusing them of orchestrating a $60 million Ponzi scheme involving a fictitious cryptocurrency trading bot. The complaint was filed in the Northern District of Georgia’s federal court in Atlanta.
Details of the Allegations and Asset Freeze
The SEC’s complaint alleges that the Adams brothers deceived over 80 investors by promoting a fake crypto bot that supposedly offered a 13.5% monthly return. They claimed the bot could capitalize on arbitrage opportunities across multiple platforms and that funds would be used in short-term, high-speed loans and trades.
The SEC contends that the trading bot was a sham. Instead of engaging in legitimate trading, the brothers are accused of misappropriating $53.9 million of the $61.5 million collected. This money was reportedly spent on luxury cars and a $30 million condominium.
Justin Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, stated that the Adams brothers falsely assured investors of minimal risk, barring a global market collapse. Additionally, Jonathan Adam allegedly concealed his previous convictions for securities fraud.
The SEC has responded by freezing the assets of the Adams brothers’ companies, GCZ Global LLC and Triten Financial Group LLC. The agency is seeking permanent injunctions against both brothers, the return of investor funds, and civil penalties.
Legal Responses and Non-Cooperation
Jonathan Adam has invoked the Fifth Amendment in response to an SEC subpoena for testimony, while Tanner Adam did not provide documents or appear for questioning.
The Bigger Picture of Crypto Fraud
Despite a $1.5 billion drop in scam-related crypto transactions in 2023, Ponzi and pyramid schemes continue to dominate the fraud landscape. Recently, the SEC also charged NovaTech Ltd. and its founders, Cynthia and Eddy Petion, with defrauding over 200,000 investors by promising returns from supposedly secure crypto and forex investments that never materialized.
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