SEC Charges Brothers For $60 Million Crypto Ponzi Scheme

According to Cointelegraph, the United States Securities and Exchange Commission (SEC) has charged two brothers, Jonathan Adam and Tanner Adam, for allegedly operating a $60 million crypto Ponzi scheme involving a non-existent crypto trading bot. The SEC's complaint, filed on August 26 in the United States District Court for the Northern District of Georgia, Atlanta, claims the brothers lured over 80 investors by promising 13.5% monthly returns through a purported crypto bot that identified arbitrage trading opportunities on various platforms. The SEC alleges that from January 2023 to June 2024, the brothers misled investors by claiming their bot could exploit price differences across different markets through simultaneous asset purchases and sales. Investor funds were supposedly placed into a lending pool to fund flash loans and complete trades, with assets being borrowed and returned within the same blockchain transaction. However, Justin Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office, stated that the trading scheme was entirely fraudulent and the bot did not exist. Instead, the SEC accuses the brothers of misappropriating $53.9 million of the $61.5 million raised, using the funds to finance lavish lifestyles, including purchasing cars, trucks, and constructing a $30 million condominium. While some investors received partial returns, the majority of the funds were used for personal expenditures. The SEC has obtained emergency asset freezes for the brothers' companies, GCZ Global, LLC, and Triten Financial Group LLC, to halt the scheme. The SEC also claims that Jonathan Adam misrepresented his background to gain investors' trust, failing to disclose three previous convictions for securities fraud. The government agency has charged the brothers with violating the antifraud provisions of federal securities laws and is seeking permanent injunctions against their companies, the forfeiture of all investor funds, and civil penalties. In a related note, blockchain intelligence firm TRM Labs reported that $7.8 billion was paid to cryptocurrency pyramid and Ponzi schemes worldwide in 2022.