SEC Charged Two Brothers for $60 Million Crypto Ponzi Scheme: Here’s The Report

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As a seasoned crypto investor who has seen the industry evolve from its infancy, I can’t help but feel a mix of dismay and caution as I read about yet another Ponzi scheme that has managed to swindle millions from unsuspecting investors. The case involving Jonathan and Tanner Adam is particularly troubling because it not only exploits the trust placed in them by their victims, but also because they used funds from a bank they were entrusted with to fuel their scam.

As cryptocurrency trading gains more traction, so does the prevalence of crypto-related scams. Inexperienced users or those seeking quick profits often fall victim to deceptive practices such as Ponzi schemes in crypto, “pig butchering,” and various other types of frauds.

One example is the former Kansas bank CEO sentenced to 24 years after losing millions in pig butchering scams. More importantly, he stole this money from the bank. And now, the SEC has charged two brothers with embezzling $60 million in a Ponzi scheme involving fake crypto bots.

80 People Scammed in $60 Million Crypto Ponzi Scheme

According to documents filed with the U.S. Securities and Exchange Commission, Jonathan Adam and his brother Tanner Adam, who are behind GCZ Global LLC and Triten Financia Group LLC, have been accused of orchestrating a $60 Million cryptocurrency Ponzi scheme that has affected approximately 80 individuals.

In simpler terms, it can be said that Jonathan, who has been found guilty three times for securities fraud, lied about his past to gain the confidence of investors. Consequently, on August 26th, he and his brother were arrested for fraud in the US District Court for the Northern District of Georgia.

As a researcher, I uncovered an alarming incident that unfolded from January 2023 to June 2024, spanning over a year. During this period, the duo, identified as Janathan and Tanner, orchestrated a crypto investment scheme that deceived approximately 80 investors. They lured these unsuspecting individuals with enticing promises of consistent 13.5% monthly returns.

As an analyst, I’ve uncovered that they asserted their strategy was to utilize investor’s funds as a lending pool via Smart Contracts, with these resources channeled towards flash loans to facilitate arbitrage trades. However, upon examination by the SEC, it appears that this lending pool does not exist in reality. Instead, it seems that the invested funds were employed for personal profit-making purposes.

According to Justin C. Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, it is alleged that the Adam brothers deceived their investors by promising lucrative returns on a fictitious crypto investment. Instead of using the funds for their intended purpose, they employed a Ponzi scheme-like approach, distributing payments to earlier investors and squandering the money on luxury items such as designer goods, recreational vehicles, and expensive homes valued at over a million dollars.

Crypto Ponzi Scammed Money Used For Cars and Condominiums

The Adam brothers guaranteed the security of the investors’ assets. They pledged to securely store the funds within Smart Contracts right away, making them inaccessible to anyone else. Regrettably, this was not the case.

The duo managed to gather approximately $61.5 million from investors, but around 87% of that sum was spent on personal benefits, expenses such as commissions, fees, and returning the initial investments. The lawsuit claims they used a significant portion of this money for various purposes, including constructing a condominium worth $30 Million in Miami, purchasing a house valued at $1.8 Million in Texas, and spending $480,000 on cars, trucks, and leisure vehicles.

Tanner Adam owns both the condominium and the family house in Texas. On the other hand, Jonathan Adam has spent the sum of $480,000 on extravagant cars and vehicles. The Securities and Exchange Commission (SEC) recently disclosed that only $400,000 remains in the official accounts, with the rest having been used for various personal expenses by someone named Adam.

1) The authorities have been vigilantly working on cryptocurrency regulations, with the Securities and Exchange Commission (SEC) recently taking action against Abra for unregistered crypto offerings. This has sparked a growing call from investors for stricter guidelines due to concerns about potential financial losses from their investments.

Final Thoughts

In light of the increasing number of Ponzi schemes in the cryptocurrency world, another case of embezzlement amounting to $60 Million has surfaced. As a result, the Securities and Exchange Commission (SEC) has accused two brothers of defrauding 80 crypto investors. These scammers promised a 13.5% return on investment and the security of funds until the contract’s end date. They enticed crypto investors with a bogus automated crypto trading bot and launch pool, which they claimed would loan to arbitrage traders.

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2024-08-27 11:42