The United States Securities and Exchange Commission (SEC) has charged Neil Chandran and seven other individuals and entities with orchestrating the fraudulent cryptocurrency investment scheme called CoinDeal.
The suspects allegedly defrauded investors with around $45 million over the years and used the money to buy real estate, cars and a boat.
The second accused Neil Chandran, Michael Glaspie, Garry Davidson, Linda Knott, Amy Mossel, AEO Publishing Inc, Banner Co-Op, Inc and BannersGo, LLC of embezzling $45 million from consumers through their fraudulent entity CoinDeal.
The individuals promised to sell the blockchain-based project to a group of top buyers, which would guarantee excellent returns for investors. They also misled them about the valuation of CoinDeal and the companies involved in the potential acquisition deal.
The defendants executed their scheme between January 2019 and 2022. The sale of CoinDeal never took place and the investors did not receive any distributions for their involvement in the scheme. The SEC further argued that Chandran, Glaspie, Davidson, Knott and Mossel used the $45 million raised to buy cars, properties and a boat. Daniel Gregus – Director of the SEC’s Chicago Regional Office – commented:
“We allege that defendants falsely claimed access to valuable blockchain technology and that the impending sale of the technology would generate over 500,000x returns for investors.
As alleged in our complaint, in reality it was all an elaborate scheme in which the defendants enriched themselves while defrauding tens of thousands of retail investors.
The US Department of Justice previously arrested Chandran for offenses related to wire fraud and participating in illicit monetary transactions while part of CoinDeal.
The Commission seeks to impose permanent sanctions and injunctions on all defendants. At the same time, he insists that Chandran be given a conduct-based restraining order.
The previous SEC hunt
The US regulator launched another investigation against two consultancy firms and their owner – Gabriel Edelman – for running a Ponzi-style cryptocurrency scheme in September last year.
The organizations reportedly operated between February 2017 and May 2021, raising nearly $4.4 million from investors.
Edelman promised that he would invest the capital in cryptocurrencies purchased at discounted rates. However, he channeled “only a small portion of investor funds into digital assets”, using the rest to buy personal items and send money to family members. The SEC explained in detail how Edelman’s Ponzi scheme works:
“For example, an investor initially invested $50,000. Edelman returned $75,000 within months and the investor subsequently invested an additional $600,000. Edelman then returned $720,000 a few months later. After that, the investor invested $1,000,000, based on alleged past performance and Edelman’s promise that the investor would receive a 15% return. Subsequently, Edelman did not return any funds to this investor.
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