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SEC Accuses 2 Firms of Crypto Pump-and-Dump Scheme
The complaint alleges the two companies pumped the price of their cryptocurrency by falsely claiming they had acquired $10 billion in gold bullion to back it.
The U.S. Securities and Exchange Commission has filed charges against Bermuda-based Arbitrade Ltd and Canada-based Cryptobontix, as well as their principals, for carrying out an alleged pump-and-dump scheme involving a crypto asset called “Dignity” or “DIG,” according to a press release.
According to the complaint, the two firms falsely claimed between May 2018 and January 2019 that Arbitrade had acquired and received title to $10 billion in gold bullion, and that the company planned to back each DIG token issued and sold to investors with $1 worth of this gold.
STORY CONTINUES BELOW
In reality, however, the SEC claims the gold acquisition transaction was a ruse to boost demand for DIG, allowing the company’s principals to sell at least $36.8 million of DIG, including to U.S. investors, at inflated prices.
The SEC is charging the defendants with violating the antifraud and securities registration provisions of the federal securities laws.
The complaint seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties against all of the defendants, as well as officer-and-director bars against the individual defendants.
Read more: How to Spot Crypto Pump-and-Dump Schemes
Nelson Wang
Nelson edits features and opinion stories and was previously CoinDesk’s U.S. News Editor for the East Coast. He has also been an editor at Unchained and DL News, and prior to working at CoinDesk, he was the technology stocks editor and consumer stocks editor at TheStreet. He has also held editing positions at Yahoo.com and Condé Nast Portfolio’s website, and was the content director for aMedia, an Asian American media company. Nelson grew up on Long Island, New York and went to Harvard College, earning a degree in Social Studies. He holds BTC, ETH and SOL above CoinDesk’s disclosure threshold of $1,000.
