The U.S. Securities and Exchange Commission (SEC) charged two brothers with allegedly operating a $61.5 million Ponzi scheme that relied on promoting a fake crypto trading bot.
The SEC accuses Jonathan Adam and his brother Tanner Adam of luring in more than 80 investors across the country by promising 13.5% monthly returns via a crypto asset lending pool.
[adinserter block="1"]The regulator says the brothers claimed to have developed an automated bot that identified crypto arbitrage trading opportunities. The brothers allegedly said the bot used smart contracts to provide “flash loans” out of the lending pool to fund arbitrage traders.
However, the SEC says the lending pool didn’t actually exist, accusing the brothers of using at least $53.9 million worth of the victims’ money to pay off earlier investors, interest and finders’ fees and make personal purchases.
Tanner Adam allegedly siphoned investor funds to make payments towards building a $30 million condominium in Miami, and Jonathan allegedly used at least $480,000 to buy a fleet of cars, trucks and recreational vehicles.
The SEC also alleges that Jonathan Adam hid the fact that he had been convicted of three counts of securities fraud from investors.
The regulator obtained an emergency asset freeze against the brothers and charged them with violating the antifraud provisions of federal securities laws.
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