The United States Securities and Exchange Commission says it has obtained an order to freeze the assets belonging to cryptocurrency firm, BKCoin Management LLC and its principal, Kevin Kang.
According to the report, the firms were being investigated for a crypto asset fraud scheme.
The SEC’s complaint, filed in the United States District Court for the Southern District of Florida, alleges that BKCoin and Kang violated the antifraud provisions of the federal securities laws.
“From at least October 2018 through September 2022, BKCoin raised approximately $100 million from at least 55 investors to invest in crypto assets, but BKCoin and Kang instead used some of the money to make Ponzi-like payments and for personal use.
“According to the SEC’s complaint, filed under seal on February 23, 2023, and unsealed today, BKCoin and Kang assured investors that their money would be used primarily to trade crypto assets and represented that BKCoin would generate returns for investors through separately managed accounts and five private funds. As the complaint alleges, the defendants disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors. The complaint also alleges that Kang misappropriated at least $371,000 of investor money to, among other things, pay for vacations, sporting events tickets, and a New York City apartment.
“As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena, ” the statement said