SEC Charges 17 Individuals in Crypto Ponzi Scheme Targeting Thousands of Latino Investors

SEC Charges 17 Individuals in $300 Million Crypto-Asset Ponzi Scheme Targeting the Latino Community

The Securities and Exchange Commission today charged 17 individuals for their roles in a $300 million Ponzi scheme that involved Houston, Texas-based CryptoFX LLC and targeted more than 40,000 predominantly Latino investors in the U.S. and two other countries. Today’s complaint follows the SEC’s successful emergency action in September 2022 that halted the CryptoFX scheme and charged its two main principals, Mauricio Chavez and Giorgio Benvenuto.

“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from ‘risk free’ and ‘guaranteed’ crypto and foreign exchange investments,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across ten states and two foreign countries. A scheme of that size requires lots of participants, and as today’s action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims.”

Craig Wright Is Not Satoshi, Didn’t Author Bitcoin Whitepaper, Judge Rules

Craig Wright is not Satoshi Nakamoto or the author of the Bitcoin whitepaper, U.K. Judge James Mellor said after closing arguments in the Crypto Open Patent Alliance (COPA) trial on Thursday.

The evidence presented during the month-long trial was “overwhelming,” the judge said, adding that he plans to write a ruling detailing his conclusions – including that Wright did not create the Bitcoin system.

“I will make certain declarations, which I am satisfied are useful and are necessary to do justice between the parties. First, that Dr. Wright is not the author of the Bitcoin white paper. Second, Dr. Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period 2008 to 2011. Third, Dr. Wright is not the person who created the Bitcoin System. And, fourth, he is not the author of the initial versions of the Bitcoin software. Any further relief will be dealt with in my written judgment,” Judge Mellor said.

SEC’s WhatsApp Probe: Citadel, KKR, Blackstone Seek Ways to Blunt Penalties

Top hedge funds and private equity firms including Citadel, KKR & Co. and Blackstone Inc. are discussing ways to blunt penalties by the Securities and Exchange Commission stemming from their use of disappearing messaging apps.

With the regulator stepping up efforts to police Wall Street’s electronic communications, the firms have held talks about how to design a legal strategy and what potential settlements could look like, according to people familiar with the discussions. Their goal is to minimize any fines and ensure that if they reach a settlement, no firm is singled out for a harsher penalty, said the people, who weren’t authorized to speak publicly.

And while Citadel has talked with the group, Ken Griffin’s Miami-based fund is still prepared to fight the regulator in court if necessary, the people said. Citadel is pushing for firms to resist, arguing that the rules requiring brokerages to keep records don’t apply to hedge funds and private equity, the people said.

The New Hacker Playbook: Weaponizing the SEC’s Cyber Disclosure Rules

In the first instance, Alphv contacted the SEC to report that a public company issuer had failed to report a hack. Why did Alphv have this information? Because Alphv was the hacker.

However, Alphv’s prowess doesn’t extend to reading implementation dates of disclosure rules. The whistleblower-style complaint was premature because, although the new cyber disclosure rules took effect in September 2023, the relevant four-day, 8-K requirement only took effect in December 2023.

But the calendar marches on, and Alphv was far from done. In December 2023, Alphv took a new and even more troubling tack.

According to a report at DataBreaches. net, here’s how Alphv described its next tactic against Viking Therapeutics:

“Despite the stringent cybersecurity disclosure requirements set forth by the Securities and Exchange Commission (SEC), Viking Therapeutics failed to promptly report a material cybersecurity incident involving patient data as mandated. To address the new criteria for a persons [sic] reporting an incident, an employee of Viking Therapeutics has agreed to file a report after a productive talk with his family.”

Florida Man Arrested For $77 Million Tender Offer Fraud

Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JONATHAN MOYNAHAN LARMORE with tender offer fraud and securities fraud in connection with LARMORE’s announcement of a fake tender offer to manipulate the stock price of WeWork, Inc. (“WeWork”). LARMORE is alleged to have announced a false $77 million tender offer for WeWork stock, news of which immediately led investors to buy WeWork stock at fraudulently inflated prices during after-hours trading, in an effort to drive up the value of his WeWork call options and shares. LARMORE was arrested this morning and will be presented in federal court later today in the Middle District of Florida. The case is assigned to U.S. District Judge Paul A. Engelmayer.

Fees Pushing $100,000 Fuel Doomed M&A Lawsuits Lawyers Call Easy

Some judges have been slower than others to undercut the “mootness fees” driving a torrent of M&A litigation, potential six-figure payouts dangled before lawyers who file suits destined for dismissal.

A bid by Volta Inc. shareholders for $171,000 in attorneys’ fees failed last month in a case over Shell Plc’s $149 million buyout of the electric-vehicle charging company. It’s the among the latest decisions in a growing push by judges to disincentivize challenges to proposed mergers — particularly those seeking big payouts from companies after a remedial disclosure renders the lawsuit moot.

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“There has been a concern for a number of years that it’s easy to file a lawsuit challenging a merger to try and wrestle some sort of fee award from some sort of corrective disclosure for the suit’s nuisance value because the parties want to move forward with the merger and want the case to go away,” said Jill Fisch, co-director of the Institute for Law & Economics at the University of Pennsylvania’s Carey Law School. “Often the disclosures are not material, so that’s not to say that mergers can’t be challenged for good reason, but historically we’ve seen a lot more challenges than we’ve seen valid claims.”