August 30, 2022:

Defendant was extradited to the U.S. on a 6-count indictment charging wire fraud, securities fraud, and conspiracies to commit wire fraud and securities fraud in connection with the operation of eight companies that purported to offer, invest in or mine digital assets. Defendant allegedly "perpetrated a brazen scheme in which he fleeced investors who funneled millions of dollars into fraudulent cryptocurrency,” stated United States Attorney Peace. DOJ Link

September 9, 2022:

"A Florida man pleaded guilty today to conspiracy to commit securities fraud in connection with a global cryptocurrency-based Ponzi scheme that took in approximately $100 million from investors." Defendant "was the “Head Trader” for EmpiresX, a purported cryptocurrency platform [and] admitted that he and others fraudulently promoted EmpiresX by making numerous misrepresentations regarding, among other things, a purported proprietary trading bot and fraudulent “guaranteed” returns to investors and prospective investors in the company." DOJ Link

"A Florida man pleaded guilty today to conspiracy to commit securities fraud in connection with a global cryptocurrency-based Ponzi scheme that took in approximately $100 million from investors." Defendant "was the “Head Trader” for EmpiresX, a purported cryptocurrency platform [and] admitted that he and others fraudulently promoted EmpiresX by making numerous misrepresentations regarding, among other things, a purported proprietary trading bot and fraudulent “guaranteed” returns to investors and prospective investors in the company." Defendant in EmpireX case pleads guilty

Defendants "claimed that EmpiresX operated a trading bot that used artificial and human intelligence to maximize profitability for investors. Instead, EmpiresX operated a Ponzi scheme by paying earlier investors with money obtained from later EmpiresX investors." "In addition, despite representations to the contrary, EmpiresX never registered, nor took steps to register, EmpiresX’s investment program as an offering and sale of securities with the U.S. Securities and Exchange Commission, nor did EmpiresX have a valid exemption from this registration requirement."

In yesterday's speech SEC Chair Gensler commented that “Joseph Kennedy, the first Chairman of the SEC, had a saying: 'No honest business need fear the SEC,'" Here's the full text of that speech entitled "Kennedy and Crypto". Gensler's Speech Gensler commented that "That oversight should not change just because the issuance and trading of certain securities is based on a new technology." And that "The investing public benefits when they receive disclosures and related protections about a project’s prospects and business. The investing public benefits when intermediaries are registered and overseen." 

On the subject of Crypto tokens, Gensler said: "Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these thousands of crypto security tokens are covered under the securities laws." "Some tokens may not meet the definition of a security — what I’ll call crypto non-security tokens. These likely represent only a small number of tokens, even though they may represent a significant portion of the crypto market’s aggregate value." 

The complaint alleges the blockchain startup failed to register more than $16 million in crypto asset securities. https://www.sec.gov/litigation/litreleases/2022/lr25468.htmAccording to the SEC Press Release: Defendants "conducted an unregistered offering ... ("DRGN") in two phases: (1) a discounted "presale" in August 2017 to members of a crypto investment club, and (2) an initial coin offering ("ICO") in October and November 2017 ..."  "Through this offering, the defendants allegedly raised approximately $14 million from approximately 5,000 investors around the world, including the United States." "The defendants marketed the offering to crypto investors, and their personnel and agents publicly discussed DRGN's investment value, pricing, and "listing" on trading platforms, among other things."  The SEC ... charges the defendants with violating Sections 5(a) and (c) of the Securities Act of 1933 ("Securities Act") ... [and] seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties against and conduct-based injunctions against each defendant. Twitter Thread