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The United States Securities and Exchange Commission (SEC) has dragged another suspected digital asset offender to court. Gabriel Edelman and his companies, Creative Advancement LLC and Edelman Blockchain Advisors, had their day in court “for fraudulently raising funds and misappropriating funds.”

In a statement, the SEC disclosed that Edelman used his companies to offer securities to members of the general public, claiming to invest the funds in digital assets. However, after raising over $4 million, Edelman only invested a portion of the funds in virtual currencies and turned the rest for his personal use.

To keep the scheme running, the SEC notes that the suspect paid a portion of investors in a manner that bears striking similarities with Ponzi schemes. Edelman operated his illegal activity between February 2017 and May 2021, raking hundreds of victims. Many victims had little to no knowledge of virtual currencies and their applications. Instead, they were coaxed into investing in the scheme by Edelman’s promises of sure returns.

The commission is charging the defendant for breaching section 17 (a) of the Securities Act of 1933 and section 10 (b) of the Securities Exchange Act of 1934, dealing with fraud and misrepresentation. Prosecutors are seeking “permanent injunctions, disgorgement with prejudgment interest, and civil penalties from the Defendants.”

Edelman faces a stiff sentence if found guilty, with legal experts predicting up to 21 years in federal prison. However, a guilty plea or a plea bargain with the prosecutors might mitigate his sentence.

SEC’s legal spree vs virtual asset fraud

The SEC has been on a roll in taking several virtual currency fraudsters to court. The Commission’s renewed efforts in instituting legal action against the bad actors stem from a desire to stamp its authority over the industry.

Last week, the SEC accused the principal members of Chicago Crypto Capital (CCC) of acting as “unregistered broker-dealers” and carrying out an unregistered offering of BXY tokens.

Apart from its qualms with fraud, the SEC has fought against virtual currency issuers for failing to register their “securities” with the commission. This formed the backbone of its argument in the landmark case against Ripple Labs, which has seen several twists and turns since it began in December 2020.

Analysts are already hinting toward a potential clash of interest with the Commodity Futures Trading Commission (CFTC) over which the agency with the legal power over the sprawling digital assets ecosystem.

Watch: The BSV Global Blockchain Convention presentation, Trust But Verify: Everything

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