PANews reported on August 27 that according to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) accused two brothers of operating a $60 million cryptocurrency Ponzi scheme that used a cryptocurrency trading robot that never existed as a gimmick. In an indictment filed with the U.S. District Court for the Northern District of Georgia (located in Atlanta) on August 26, the SEC claimed that Jonathan Adam and his brother Tanner Adam claimed to operate a cryptocurrency robot that could bring investors a monthly net return of 13.5%, thereby defrauding more than 80 people.
U.S. government agencies allege that from January 2023 to June 2024, the brothers told investors that their robot was able to identify arbitrage trading opportunities on cryptocurrency platforms and could buy and sell assets simultaneously to take advantage of small differences between different market prices. They promised investors that the funds would go into a lending pool to fund flash loans and complete transactions, and that the assets would be borrowed and returned in the same blockchain transaction. The trading plan was completely fraudulent, and the robot did not exist. The brothers squandered $53.9 million of the $61.5 million they raised. Investors did receive some returns, but most of the money was used for a lavish lifestyle, including buying cars, trucks and building a $30 million apartment.
To stop the scheme, the SEC has imposed an emergency asset freeze order on Jonathan Adam and Tanner Adam’s companies, GCZ Global, LLC and Triten Financial Group LLC. The government agency also alleges that Jonathan Adam misrepresented his background in order to gain the trust of investors and failed to disclose that he had three prior convictions for securities fraud. The SEC has charged the brothers with violating the antifraud provisions of the federal securities laws. The SEC is seeking a permanent injunction against the companies, forfeiture of all funds raised from investors, and civil penalties.