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The SEC has prosecuted three individuals for allegedly defrauding investors during their unregistered offering of crypto asset securities. The commission announced the charges against owner, Brian Amoah, and former salesmen Darcas Oliver Young and Elbert “Al” Elliott of Chicago Crypto Capital LLC on September 14. The case offers another example of the SEC, under Chair Gensler, aggressively cracking down on fraudulent crypto projects.
From August 2018 to November 2019, Chicago Crypto Capital LLC (CCC) conducted an unregistered offering of BXY tokens to approximately 100 investors, many of whom had no crypto experience according to the complaint. It also misled potential investors about the custody and delivery of BXY, the markup charged by CCC, the delivery of account statements, CCC’s liquidation of an investor’s BXY, their personal investments in BXY, and the financial and management problems occurring at BXY’s issuer, Beaxy Digital Ltd. CCC even went as far as stating that this was an opportunity “to make BIG MONEY” in its sales scripts and comparing financials to other coin offerings with extremely high gains.
Beaxy Digital Ltd’s platform had not been live when the BXY tokens were sold, with most of the proceeds being used in an attempt to get the platform up and running. Based on these circumstances, and with Beaxy now defunct, the SEC is has accused CCC of acting as an unregistered broker and fraudster, seeking to bar them from offering crypto securities.
The SEC has recently doubled the size of their Enforcement’s Crypto Assets and Cyber Unit to help investigate and act on situations like with CCC. Along with this, charging CCC for acting as an unregistered broker reaffirms the SEC and Chair Gensler’s belief that the vast majority of cryptocurrencies are securities.
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