SEC accuses Brothers of orchestrating $60 million Ponzi crypto scam using crypto bot that falsely claimed 13.5% monthly return rate

The United States Securities and Exchange Commission (SEC) has charged two brothers, Jonathan Adam and Tanner Adam, for allegedly orchestrating a $60 million cryptocurrency Ponzi scheme.

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Non-Existent Trading Bot

The brothers claimed their crypto trading bot could secure investors a 13.5% monthly return. They attracted over 80 individuals between January 2023 and June 2024.

Their story was that the bot identified and exploited price differences across crypto markets, using investor funds in a lending pool for flash loans and trades.

However, according to the SEC, this trading bot never existed.

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Lavish Lifestyles with Investor Funds

SEC enforcement official Justin Jeffries points out that $53.9 million of the $61.5 million raised was misspent by the brothers.

Investors received some returns, but most of the money went towards luxury items, including vehicles and constructing a $30 million condo.

Jeffries describes the operation as fraudulent, noting that the brothers used investor funds for Ponzi-like payments and personal indulgences.

The brothers are accused of misusing most of their investors' money to fund their lavish lifestyles. Source: SEC

Misrepresentation and Convictions

In addition to promising high returns, the brothers downplayed the risks involved.

Jonathan Adam is also accused of misrepresenting his background, failing to disclose prior securities fraud convictions to gain investors’ trust.

SEC’s Response

The SEC has moved swiftly, securing emergency asset freezes for the companies involved, GCZ Global, LLC, and Triten Financial Group LLC.

The agency is seeking permanent injunctions, forfeiture of the ill-gotten funds, and civil penalties against the brothers.

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Ponzi Schemes in the Crypto Space

This case is part of a broader issue. In 2022, blockchain intelligence firm TRM Labs reported that $7.8 billion was funnelled into cryptocurrency pyramid and Ponzi schemes globally.

Despite the SEC's actions, the case highlights ongoing challenges in regulating the cryptocurrency sector, where fraudulent schemes continue to thrive.