The Securities and Exchange Commission filed charges against the founder and three U.S. promoters of Trade Coin Club, alleging the crypto-trading membership club operated as a Ponzi scheme that raised 82,000 bitcoins, valued at $295 million in 2018, from investors around the world.
The charges against four individuals, filed on Thursday in federal court in Seattle, allege that Trade Coin Club, created and controlled by Douver Torres Braga, was a multilevel marketing program operated between 2016 and 2018 that promised profits from a crypto-asset trading bot.
The securities regulator alleges that Mr. Braga and his promoters lured more than 100,000 investors with false promises of daily minimum returns of 0.35% from the trading bot. Instead, the founder allegedly used the money for his own benefit and to pay a network of promoters, including Joff Paradise, Keleionalani Akana Taylor and Jonathan Tetreault, who were also charged, according to the SEC complaints.
The Trade Coin Club paid withdrawals from the club with investor deposits, the SEC said.
The SEC said the individuals violated federal securities laws and face charges including violations of antifraud, securities registration and broker-dealer registration provisions.
The website for Trade Coin Club, which marketed itself as a membership group for trading bitcoin, is no longer accessible. Mr. Braga, who currently lives in Brazil, and Ms. Taylor, who lives in Hawaii, couldn’t be reached for comment. Calls to phone numbers for Mr. Paradise, who is listed as Trade Coin’s founding partner and “master distributor,” weren’t answered and he didn’t immediately respond to an emailed request for comment. Mr. Tetreault didn’t immediately respond to a request for comment.
The charges come after SEC Chairman Gary Gensler highlighted the agency’s regulatory initiatives in the crypto sector in a speech this week. The SEC imposed record monetary sanctions across all sectors this past fiscal year, taking in $6.4 billion in the 12 months ended Sept. 30. That beat the previous record, set in fiscal 2020, by nearly 40%, underscoring the chairman’s focus on high-profile cases with steep penalties for misconduct.
“Fraud is fraud, regardless of the types of investors you have defrauded and the types of securities used in the fraud,” Mr. Gensler said in his speech before the Practising Law Institute Wednesday.
Write to Mengqi Sun at [email protected]
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