SEC Claims Two Brothers Ran a $60 Million Crypto Ponzi Scheme

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by Giorgi Kostiuk

2 years ago

Made with AI

  1. SEC Issues Ponzi Warning
  2. Details on the Matter
  3. Investigation Results


    4. The United States Securities and Exchange Commission (SEC) accuses two brothers of operating a $60 million crypto Ponzi scheme involving a non-existent trade bot.

    SEC Issues Ponzi Warning

    In a complaint filed on August 26 in the United States District Court for the Northern District of Georgia, Atlanta, the SEC alleges that Jonathan Adam and his brother Tanner Adam deceived over 80 investors with claims of a crypto bot that could provide a 13.5% monthly return.

    Details on the Matter

    From January 2023 to June 2024, the brothers told investors that their bot identified arbitrage trading opportunities on crypto platforms and could simultaneously buy and sell assets to profit from small price differences in different markets. Investors were informed that their funds would go into a lending pool to finance instant loans and complete transactions, with assets being borrowed and returned within the same blockchain transaction. Justin Jeffries, Deputy Chief of Enforcement at the SEC’s Atlanta Regional Office, stated the trading plan was entirely fraudulent, and the bot did not exist.

    Investigation Results

    Instead, the brothers misappropriated $53.9 million out of the $61.5 million collected. Investors received some money back, but the majority was used to finance a luxurious lifestyle, including purchasing cars and constructing a multi-million-dollar apartment complex. To halt the scheme, the SEC obtained emergency asset freezes for Jonathan and Tanner Adam’s companies GCZ Global, LLC, and Triten Financial Group LLC. The SEC accuses Jonathan Adam of misrepresenting his background to gain investors’ trust and failing to disclose three previous convictions for securities fraud. The SEC seeks permanent injunctions against the brothers’ companies, the disgorgement of all funds taken from investors, and civil penalties.

    In June, blockchain data analysis platform TRM Labs reported that $7.8 billion was paid to crypto pyramid and Ponzi schemes worldwide in 2022.

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