SEC Accuses Siblings in $60 Million Cryptocurrency Ponzi Scheme Linked to Fraudulent Trading Software

The U.S. Securities and Exchange Commission (SEC) has initiated legal action against two siblings for allegedly orchestrating a $60 million cryptocurrency Ponzi scheme involving a fictitious trading bot.

The allegations were outlined in a complaint submitted on August 26 in the U.S. District Court for the Northern District of Georgia, Atlanta.

The SEC asserts that Jonathan Adam and Tanner Adam attracted over 80 investors by advertising a non-existent crypto trading bot that purportedly could yield remarkable monthly returns of 13.5%.

Crypto Arbitrage Trading Bot

The brothers are said to have conducted the scheme from January 2023 until June 2024.

They persuaded investors that their bot was capable of detecting arbitrage opportunities across multiple crypto platforms, enabling it to buy and sell assets simultaneously and profit from slight price discrepancies in various markets.

The SEC’s complaint indicates that the brothers assured investors that their funds would be pooled into a lending system to facilitate flash loans and execute trades, with the borrowed assets being returned within the same blockchain transaction.

However, the SEC argues that the trading bot was entirely fictitious.

Look: The SEC has just apprehended two brothers for executing a significant crypto scam valued at $60 million! Jonathan Adam and his brother, Tanner Adam, allegedly attracted over 80 individuals by claiming to manage a crypto bot that could yield investors 13.5% monthly returns. pic.twitter.com/hMQfk4How6

— Randy (@money4randy) August 27, 2024

Justin Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, stated that the entire trading operation was fraudulent.

According to Jeffries, the brothers misappropriated $53.9 million of the $61.5 million they collected from investors.

While some investors received partial repayments, the bulk of the funds were reportedly utilized to support the brothers’ lavish lifestyles, including the acquisition of luxury vehicles and the construction of a $30 million condominium.

“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” Jeffries remarked.

In response to the SEC’s actions, the agency has successfully secured emergency asset freezes on the brothers’ companies, GCZ Global, LLC, and Triten Financial Group LLC, in an effort to terminate the fraudulent operation.

The SEC also accused Jonathan Adam of deceiving investors by hiding his criminal history, which includes three previous convictions for securities fraud.

The agency is now seeking permanent injunctions against the brothers and their companies, the recovery of all misappropriated funds, and civil penalties.

FutureNet Co-Founder Arrested

Last week, authorities in Montenegro detained Roman Ziemian, co-founder of the alleged crypto fraud scheme FutureNet, which is accused of defrauding investors of around $21 million.

The arrest took place in the capital city of Podgorica, where Ziemian was reportedly living under an assumed identity.

Ziemian is sought by both South Korean and Polish authorities on charges of fraud, money laundering, and theft.

Ziemian’s situation is reminiscent of that of Do Kwon, co-founder of Terraform Labs, who is also in custody in Montenegro and faces similar allegations.

Earlier this month, Kwon’s extradition was delayed once more after the Supreme State Prosecutor’s Office (VDT) submitted a request for the protection of legality.

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