The U.S. Securities and Exchanges Commission has obtained an asset freeze order against three individuals alleged to have operated a $12 million digital currency scam. The three sold interests in a fake digital currency block reward mining scheme, but directed the investments into personal needs.
In its complaint, the regulator accused the three of the operating three multi-level marketing (MLM) businesses from July 2017 to November 2019. The first was in Modern Money Team, a cloud mining operation that paid out monthly interest to its investors. Investors could join for as little as $50 or subscribe to a “lifetime contract” for just $2,000. They could pay in fiat or through digital assets. This business generated $3.25 million.
They then moved on to “cryptocurrency trading packages.” These packages ranged from $20-$500 for a maximum period of two years.
The SEC alleged that the three—Daniel Putman, Jean Paul Ramirez and Angel Rodriguez—misappropriated the investors’ funds. In one instance, Putnam transferred $133,752 worth of BTC into his Trezor hardware wallet, according to the regulator. This is despite signing contracts that stated he would not touch the investors’ money and that he’d only be compensated from the profits he generated.
The watchdog further claims that the three lied about their association with the SEC. Putnam, who was the head of the operation, allegedly claimed that the trading packages were SEC compliant.
The SEC clarified, “Contrary to this representation, Putnam filed no registration statements with the Commission with respect to the trading packages, nor had he taken any other steps to assure compliance with Commission statutes or rules.”
Additionally, the regulator retrieved some of the WhatsApp messages between Putnam and Rodriguez in which the former stated, “We are going to bring Jean Paul [Ramirez] so much money this year . . . We are either going to retire this year or go to jail . . . And I’m still not sure any of it is real.”
The SEC recommended to the court that the three disgorge all ill-gotten gains, pay a civil penalty and be permanently barred from directly or indirectly engaging in securities transactions.
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