Chinese businessman Miles Guo, was hit with a raft of charges by both the U.S. Securities and Exchange Commission (SEC) and the U.S. Attorney’s Office for the Southern District of New York.
Guo and his longtime financial advisor William Je were charged in connection with their involvement in unregistered and fraudulent offerings worth more than $850 million.
Among the many alleged schemes perpetrated by Guo and Je was the private placement offering of common stock in GTV Media Group, Inc. The SEC alleges that the pair subsequently moved $100 million of investor money to a hedge fund to benefit a company owned by Guo’s son. Guo is also accused of misappropriating $40 million to purchase and renovate a New Jersey mansion and a further $3.5 million to buy a Ferrari for his son—these funds were raised via multiple other offerings.
Guo and multiple linked companies were also charged with violating securities laws in relation to raising hundreds of millions for a security called H-Coin, an ERC-20 token on the Ethereum network, and a related stablecoin called the Himalaya Dollar. Guo falsely claimed that it was 20% backed by gold and that he would personally cover any losses incurred by investors.
The SEC labeled Guo a “serial fraudster” and alleges he raised more than $850 million linked to digital currency, technology, and luxury goods investment opportunities. The securities regulator is seeking permanent injunctions against both Guo and Je, including civil penalties, disgorgement of ill-gotten gains, and both officer and director bars. This would also prohibit Guo from participating in the issuance, purchase, sale, or offer of any securities in the future.
The charges brought by the SEC were followed by further charges brought by the U.S. Attorney’s Office for the Southern District of New York.
Almost all tokens are unregistered securities, and most ICOs were fraudulent
Almost all tokens listed on various blockchains, particularly those listed on Ethereum, are unregistered securities. SEC Chairman Gary Gensler has made it clear that, in his estimation, everything other than Satoshi’s original Bitcoin is a security, and his agency is planning to bring the hammer down on its issuers.
Furthermore, many of the tokens sold via ICOs and other fundraising mechanisms were and remained outright scams. As H-Coin victims found out the hard way, the promise of outsized returns for doing nothing other than participating in an initial coin offering is nothing more than a dream woven by clever conmen who will do little more than create a fancy-looking website to collect speculators’ cash before they disappear.
Yet, as Dr. Craig Wright has told us repeatedly, thanks to the transparent nature of blockchain technology, there’s an immutable evidence trail of all this criminality. Everyone who sent funds to fraudulent ICOs can prove it, and that’s why so many of the criminals behind them are being caught and finally charged. Unlike the schemes of the past, when records could be lost and deleted, this time, the transactions are visible on public blockchains, allowing law enforcement to figure out what happened and who was responsible.
As Miles Guo and his henchmen are learning the hard way, and as many others will in the months and years to come, blockchain is the ultimate tool for proving financial crimes have occurred. That so many have used it to fleece investors only proves how little this world-changing technology is understood.
Watch: Law & Order Regulatory Compliance for Blockchain & Digital Assets
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