SEC Files Charges Against Two Crypto Companies For Pump-and-Dump Allegations
- Arbitrade and Cryptobontix, through Hogg, Goldberg, Braverman, and Barber, reportedly misled crypto investors intending to sell them the DIG token.
- The SEC accused the two crypto companies of lying about an external audit of its gold investment by an independent accounting firm.
- One of the most used techniques in cryptocurrency pump and dump schemes is wash trading.
The United States Securities and Exchange Commission (SEC) has filed charges against Arbitrade Ltd., a Bermudan company, and Cryptobontix Inc., a Canadian company, for an alleged pump and dump cryptocurrency scheme.
In the same charges filed today, the SEC also included the said companies’ principals, Troy R. J. Hogg, James L. Goldberg, Stephen L. Braverman, and Max W. Barber.
According to the charge sheet, the SEC accused Arbitrade and Cryptobontix of perpetrating an alleged pump-and-dump scheme involving Dignity (DIG) cryptocurrency.
Reportedly, Arbitrade and Cryptobontix, through Hogg, Goldberg, Braverman, and Barber, misled investors to sell them the DIG token. The SEC noted that Arbitrade and Cryptobontix orchestrated the crypto pump and dump between May 2018 and January 2019.
Notably,
“Arbitrade and Cryptobontix issued announcements falsely claiming that Arbitrade had acquired and received title to $10 billion in gold bullion, that the company intended to back each DIG token issued and sold to investors with $1.00 worth of this gold,” the SEC noted.
Additionally, the SEC accused the two crypto companies of lying about an external audit of its gold investment by an independent accounting firm.
SEC on Crypto Pump and Dump Schemes
The cryptocurrency market experiences higher volatility compared to traditional stocks due to its complex global regulatory aspect in addition to its speculative nature. One of the most used techniques in cryptocurrency pump and dump schemes is wash trading. Furthermore, cryptocurrency exchanges can do little to prevent wash trading.
In this case, the SEC alleged that Arbitrade claimed to have acquired the gold through a purchase transaction with Barber and his company, SION Trading FZE. Whereas in reality, the gold acquisition transaction was merely a sham to boost demand for DIG crypto token. Thereby allowing Hogg and Goldberg, with Braverman’s assistance, to sell at least $36.8 million of DIG tokens.,
Consequently, the SEC charged the defendants with violating the anti-fraud 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, and officer-and-director bars against the individual defendants. The SEC’s complaint also names SION as a relief defendant seeking disgorgement plus prejudgment interest,” the SEC noted.
Pump and dump have, however, been sanitised by the meme cryptos like Dogecoin and Shiba Inu. Furthermore, the meme coins offer minimal actual world use cases apart from the speculative aspect.
Nevertheless, the United States government thinks the pump and dump crypto schemes are predatory to investors. Arguably, most digital assets and stock markets are pump and dump despite the real-world use cases inspired by the intrinsic value.
Global regulators are, however, working to minimise pump and dump crypto schemes in a bid to attract more investors.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
