$30M Ponzi scheme: SEC shutters dubious diamond-backed ICO

Getting your Trinity Audio player ready...

The Securities and Exchange Commission (SEC) has been granted a court order to prevent an alleged Ponzi scheme from continuing to solicit payments from unsuspecting investors.

Argyle Coin, LLC, and its principal Jose Angel Aman are alleged by the SEC to have been engaged in the scam, under the guise of offering investors a new token backed by diamonds.

Honorable Judge Robin L. Rosenberg of the U.S. District Court for the Southern District of Florida this week granted the SEC the order, which includes a freeze on assets covering Aman personally and the connected companies named by the regulator in its allegations.

The intervention comes after the scheme raised some $30 million from over 300 investors. The Argyle Coin token, which was claimed to be fully backed by diamond reserves, is only the latest diamond-related project from Aman to draw suspicion, with several similar past ventures promising market-beating returns from the wholesale diamond trade.

Eric I. Bustillo, director of the Miami Regional Office at the SEC, described the scheme as fraudulent, and explained how Aman diverted investment funds to his own personal accounts.

“As alleged, Aman operated a complicated web of fraudulent companies in an effort to continually loot retail investors and perpetuate the Ponzi schemes as well as divert money to himself,” Bustillo stated.

In addition to the charges relating to the token sale, Aman is accused of having operated in unlicensed securities sales for a number of years.

The enforcement action is the latest of its kind from the SEC, as the regulator continues to crackdown on illegitimate ICOs and cryptocurrency investment fraud. In 2018, the regulator launched Operation Cryptosweep to target compliance breaches across hundreds of ICO schemes, leading to a raft of action against illegal operators.

Joseph P. Borg, president of the North American Securities Administrators Association, said the enforcement action was necessary to deter criminals from peddling similar scams in future.

“Despite a series of public warnings from securities regulators at all levels of government, crypto criminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams,” Borg said.