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SEC Unveils Emergency Action Against BKCoin Over a $100M Crypto Scam

Tim Fries

Published: March 6, 2023 10:14 pm

This Monday, the Securities and Exchange Commission announced it had filed an emergency action against a Florida-based firm called BKCoin. The Commission also revealed it had filed a sealed complaint against the company already on February 23rd alleging cryptocurrency-related fraud and “Ponzi-like conduct” worth $100 million.

SEC Freezes BKCoin’s Assets, Alleges “Ponzi-like Conduct” and Fraud

According to a Monday announcement, the SEC filed an emergency action against the Florida-based BKCoin and one of its principals, Kevin Kang. The Commission Successfully obtained an asset freeze and several other emergency remedies in connection to what it deems to be a cryptocurrency fraud worth $100 million.

According to the Commission, Kang and BKCoin defrauded numerous investors between 2018 and autumn 2022 by promising that the raised funds would be primarily used for cryptocurrency trading in an effort to generate returns. However, the SEC alleges that the company extensively commingled assets and used nearly $4 million in a Ponzi scheme-like operation.

Furthermore, the Commission states that the defendants used more than $350,000 for personal spending—primarily on luxury goods. Finally, the SEC complaint filed on February 23rd, alleges that the company misrepresented itself as being independently audited by one of the “big four” auditing firms. Apart from seeking disgorgement and penalties from BKCoin, the agency is also seeking disgorgement from a firm called Bison Digital which allegedly received at least $12 million from the defendants.

The SEC and Crypto Enforcement

Few would try to deny that the SEC has been very active when it comes to enforcement actions targeting the broader digital assets industry. Over the years, filed numerous complaints against all kinds of scams ranging from individuals defrauding banks using cryptocurrency, to companies falsely claiming their tokens are backed by gold, to charging the perpetrators of what appears to be the largest digital assets scam so far.

Not all of the SEC’s actions have been welcomed, however. Its ceaseless claims that firms that conducted an initial coin offering have, in fact, engaged in unregistered securities offerings, have come under fire. The Commission’s move against firms that haven’t engaged in ICOs—like LBRY and Ripple Labs—have proven even more controversial.

More recently, the agency has been accused of attempting to outright ban digital assets in the United States in their current form after coming against “staking” and stablecoins with its Chair, Gary Gensler, claiming that most cryptocurrency companies are not compliant. However, while the SEC has been facing increased opposition, both from without and from within, the Biden administration expressed its satisfaction over the agency’s handling of the sector in its latest document on digital assets.

This article originally appeared on The Tokenist