The US Securities and Exchange Commission (SEC) has filed an emergency action against Miami-based investment adviser Bkcoin and one of its directors, Kevin Kang. “Defendants ignored the structure of the funds, commingled investors’ assets, and used more than $3.6 million to make Ponzi-like payments to fund investors,” the SEC alleged.
SEC ‘Emergency Action’ Against Bkcoin, Kevin Kang
The US Securities and Exchange Commission (SEC) announced Monday that it has filed an “emergency action” against Miami Bkcoin investment adviser and one of its directors, Kevin Kang, “for orchestrating a crypto fraud scheme of $100 million.” The securities regulator explained that it “successfully obtained an asset freeze, the appointment of a receiver and other emergency measures” against Bkcoin and Kang.
The SEC detailed that from at least October 2018 to September 2022, Bkcoin raised approximately $100 million from at least 55 investors to invest in crypto assets. “Bkcoin and Kang assured investors that their money would be used primarily to trade crypto assets and stated that Bkcoin would generate returns for investors through separately managed accounts and five private funds,” the securities regulator detailed, adding:
The defendants ignored the structure of the funds, commingled the investors’ assets and used more than $3.6 million to make Ponzi-like payments to fund investors.
The complaint alleges that Kang misappropriated at least $371,000 of investor money to pay for vacations, tickets to sporting events and an apartment in New York City, among other things. In addition, “Kang attempted to conceal unauthorized use of investor money by providing altered documents with inflated bank account balances to the third-party manager of some of the funds,” the SEC further said.
In addition, Bkcoin allegedly made material misrepresentations to some investors by falsely claiming that the company or one of its funds had received an audit opinion from a “top four auditor.” However, neither Bkcoin nor any of its funds received an audit opinion at any time.
The securities regulator alleged that Bkcoin and Kang “violated the anti-fraud provisions of the federal securities laws.” The SEC is seeking permanent injunctive relief against both defendants, as well as restitution, pretrial interest, and a civil penalty. Additionally, the complaint calls for an injunction based on the conduct and bar of an officer and director against Kang.
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