 SEC charges siblings over $60M Ponzi touting a crypto trading bot 
2024-08-27

The United States Securities and Exchange Commission (SEC) has charged two brothers for allegedly operating a $60 million crypto Ponzi scheme featuring a crypto trading bot that never existed. 
In the Aug. 26 complaint, filed in the United States District Court for the Northern District of Georgia, Atlanta, the SEC claims Jonathan Adam and his brother, Tanner Adam, lured in over 80 people by claiming to operate a crypto bot that could net investors 13.5% monthly returns.Cointelegraph
The government agency alleges that from January 2023 to June 2024, the brothers told investors their bot identified arbitrage trading opportunities on crypto platforms and could simultaneously purchase and sell assets to exploit tiny differences in prices across different markets.
Investor funds were promised their funds would go into a lending pool to fund flash loans and complete trades, with the assets being borrowed and returned within the same blockchain transaction.
Justin Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office, says the trading scheme was completely fraudulent, and the bot didn’t exist. 
Instead, he accuses the duo of misspending $53.9 million of the $61.5 raised. Investors received some money back, but the lion’s share was used to fund lavish lifestyles, including purchasing cars and trucks and constructing 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 said.
To halt the scheme, the SEC has obtained emergency asset freezes for Jonathan and Tanner Adams companies GCZ Global, LLC, and Triten Financial Group LLC. 
According to the SEC, the brothers told investors that, short of a global market meltdown, the risk to investing was “virtually nonexistent.” 
The government agency also claims Jonathan Adam misrepresented his background to gain investors’ trust and didn’t disclose three previous convictions for securities fraud. 
The SEC has charged Jonathan Adam and Tanner Adam with violating the antifraud provisions of the federal securities laws. 
It is seeking permanent injunctions against the brothers’ companies, the forfeiture of all funds taken from investors, and civil penalties.
In June, blockchain intelligence firm TRM Labs reported that a combined $7.8 billion was paid to cryptocurrency pyramid and Ponzi schemes worldwide in 2022.