The US Securities and Exchange Commission (SEC) charged Neil Chandran and seven other individuals and entities for orchestrating the fraudulent cryptocurrency investment scheme called CoinDeal.
The suspects allegedly defrauded investors with around $45 million over the years and used the money to buy real estate, cars, and a boat.
Halting the Crime
The SEC accused Neil Chandran, Michael Glaspie, Garry Davidson, Linda Knott, Amy Mossel, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC of embezzling $45 million from consumers through their fraudulent entity CoinDeal.
The individuals promised to sell the blockchain-based project to a group of prominent buyers which would guarantee great returns for investors. They also deceived them about CoinDeal’s valuation and the companies involved in the potential acquisition deal.
The defendants ran their scheme between January 2019 and 2022. CoinDeal’s sale never happened, and investors did not receive any distributions for their involvement in the project. The SEC further maintained that Chandran, Glaspie, Davidson, Knott, and Mossel used the amassed $45 million to purchase cars, properties, and a boat. Daniel Gregus – Director of the SEC’s Chicago Regional Office – commented:
“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors.
As alleged in our complaint, in reality, this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
The US Department of Justice previously arrested Chandran for offenses related to wire fraud and engaging in illicit money transactions while being part of CoinDeal.
The Commission seeks to impose penalties and permanent injunctions against all defendants. At the same time, it insists that Chandran should be a subject of a conduct-based injunction.
The SEC’s Previous Hunt
The American regulator launched another investigation against two advisory companies and their owner – Gabriel Edelman – for running a Ponzi-like cryptocurrency scheme in September last year.
The organizations supposedly operated between February 2017 and May 2021, raising nearly $4.4 million from investors.
Edelman promised he would invest the capital in cryptocurrencies purchased at discounted rates. However, he funneled “only a small portion of investor funds in digital assets,” using the rest to buy personal items and send money to family members. The SEC explained in detail how Edelman’s Ponzi scheme worked:
“For example, one Investor initially invested $50,000. Edelman returned $75,000 within a few months, and the Investor subsequently invested an additional $600,000. Edelman then returned $720,000 a few months later. After that, the Investor invested $1,000,000–based on purported past performance and Edelman’s promise that the Investor would receive a 15% return. Thereafter, Edelman did not return any funds to that Investor.”