The Securities and Exchange Commission (SEC) announced today that it filed an emergency action in connection with a crypto asset fraud scheme against Miami-based investment adviser BKCoin Management LLC.Â
The SEC is also investigating one of its principals, Kevin Kang, and successfully obtained an asset freeze, the appointment of a receiver, and other emergency relief.
BKCoin received roughly $100 million from at least 55 investors from October 2018 to September 2022 to invest in crypto assets, but BKCoin and Kang instead utilized some of the money to make Ponzi-like payments and for personal use.
BKCoin and Kang informed investors that their funds would be largely utilized to trade crypto assets and that BKCoin would create profits for investors through independently managed accounts and five private funds.
According to the complaint, the defendants ignored the funds’ structure, commingled investor assets, and utilized more than $3.6 million to make Ponzi-like payouts to fund investors.
Kang is also accused of misappropriating at least $371,000 in investor funds to pay for vacations, sporting event tickets, and a New York City condominium, among other things.
Kang sought to conceal the improper use of investor funds by giving the third-party administrator certain funds with changed documentation, including inflated bank account balances.
The complaint also claims that BKCoin fraudulently misled some investors by claiming that BKCoin or one of the funds had received an audit opinion from a “top four auditor,” while neither BKCoin nor any of the funds had received an audit opinion at any time.
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