SEC Sues WeedGenics for $60 Million Offering Fraud

SEC Shuts Down WeedGenics $60 Million Cannabis Offering Fraud

The Securities and Exchange Commission obtained an emergency order to halt an alleged ongoing offering fraud and Ponzi-like scheme by Integrated National Resources Inc. (INR), which does business as WeedGenics, and its owners, Rolf Max Hirschmann and Patrick Earl Williams, who have raised more than $60 million from investors to expand their cannabis operations, but have instead used the majority of funds to make $16.2 million in Ponzi-like payments and to enrich themselves.

According to the complaint, since at least June 2019, Hirschmann and Williams have promised investors they would use raised funds to expand WeedGenics facilities, which they guaranteed would produce up to 36 percent returns, but in reality Hirschmann and Williams never owned or operated any facilities—it was all a sham. The complaint alleges that when Hirschmann and Williams received investors’ funds, they transferred the money through multiple accounts to enrich others and for personal use such as entertainment, jewelry, luxury cars, and residential real estate. The complaint further alleges that in an attempt to avoid detection, Hirschmann, acting as the face of the company, used the fake name Max Bergmann the entire time he communicated with investors, while Williams, as Vice President of the company, worked behind the scenes while spending investor funds on his more public career as a rap musician known as “BigRigBaby.”

Mountain of FTX Evidence: Emails, Chat Logs, Code and a Notebook

Snippets of computer code. More than six million pages of emails, Slack messages and other digital records. And a small black notebook, filled with handwritten observations.

For months, federal prosecutors building the criminal case against the fallen cryptocurrency executive Sam Bankman-Fried have assembled a vast and unusually varied array of evidence. The documents include crypto transaction logs and encrypted group chats from Mr. Bankman-Fried’s collapsed exchange, FTX, as well as strikingly personal reflections recorded by a key witness in the case.

The mountain of evidence ranks among the largest ever collected in a white-collar securities fraud case prosecuted by the federal authorities in Manhattan, according to data provided by a person with knowledge of the matter….

At Bitcoin Conference, ‘No Bears Allowed’

Last year, crypto custody firm BitGo held a party where it served two sushi-grade tuna that chefs cut and carved up for guests, one of which clocked in at 200 pounds. This year, there was just one tuna, a 115-pounder, though the company made a joke of it, handing out stickers reading “#TunaWinter.”

A satellite event called Sh*tcoin Conference, which celebrates non-bitcoin cryptocurrencies viewed as worthless by some bitcoin believers, ended up smaller after crypto exchange FTX imploded late last year. FTX was supposed to sponsor it before its bankruptcy, forcing the organizers to scale the schedule back considerably. Last year, the event was a two-day conference at the nightclub Mad Club Wynwood. This year, it was one evening at a co-working space in Wynwood called the LAB Miami.

SEC Charges Internet Streaming Company for Overstating Paying Subscribers and Violating the Whistleblower Protection Provisions

The Securities and Exchange Commission today announced settled charges against Colorado-based Gaia, Inc. for overstating the number of the company’s paying subscribers, and Gaia’s CFO, Paul C. Tarell, Jr., for causing Gaia’s overstatement. The SEC also charged Gaia with retaliating against a whistleblower and impeding former employees from communicating with the Commission about potential securities law violations.

The SEC’s order finds that Gaia overstated the number of its paying subscribers for the first quarter of 2019 in an earnings call and a current report. According to the order, on April 29, 2019, Gaia announced that it met its previously forecasted subscriber target and “ended the [first] quarter with 562,000 paying subscribers.” The order also finds that on an earnings call that same day, Tarell represented that this figure excluded “subscribers for whom we were unable to successfully charge on our last renewal due to their credit cards becoming invalid.” These statements were false, according to the order, because (i) Gaia’s reported number of paying subscribers for the quarter included approximately 15,000 subscribers that had been gifted a free month in mid-March 2019, and had neither paid through the end of the month nor reactivated their paying memberships; and (ii) the reported number of paying subscribers also included approximately 4,500 others that Gaia was unable to successfully charge because the associated credit cards were declined.

According to the order, Gaia also retaliated against a whistleblower who reported the subscriber count issue both internally to Gaia management and to the Commission, when it terminated the whistleblower “for cause….”

Why Goldman Sachs Is Wrong About Blockchain (A Blockchain Due Diligence Primer)

I can’t say it any plainer: blockchain is bunk.

No doubt blockchain enthusiasts will insist that I just don’t get it. But like one famed technologist recently wrote, It really looks as if there never was an it to get.

Despite its relentless hype and inexorable bluster, blockchain technology itself has extremely limited utility and is a solution to a problem that nobody has.

SEC enforcement not ‘a game of gotcha,’ Grewal says

Securities and Exchange Commission Enforcement Director Gurbir Grewal said Tuesday that enforcement “should not be a game of gotcha,” but a joint effort by SEC and companies under scrutiny to determine whether a violation has occurred.

“This should be a collaborative process,” Grewal said in reply to a question at Securities Enforcement Forum West. “It shouldn’t be that we’re going to hold all of our cards close to the vest and surprise you at the 11th hour and hold something for trial — this is a truth-seeking mission that we’re on.”

“The most effective resolutions that I’ve seen are ones where an attorney has come in well before a formal process and said, ‘I know you’re looking at this, but have you thought about these facts, or have you looked at something this way?’” Grewal said. Such dialogue sometimes prompts the SEC not to pursue an investigation, he said.

Shaquille O’Neal Served FTX Suit at NBA Game, Plaintiff Firm Says

Shaquille O’Neal was served a lawsuit by FTX crypto-exchange users at the Miami Heat game Tuesday night after their multiple previous attempts failed, according to the plaintiffs’ law firm.

Investors who bought crypto assets through FTX are accusing the former Los Angeles Lakers star, along with other celebrities like Tom Brady and Stephen Curry, of defrauding them by promoting the now-bankrupt crypto company.

O’Neal was at the Heat vs. Celtics playoff game Tuesday while broadcasting for TNT, according to the Moskowitz Law Firm, which represents FTX users. “The process server filmed the event to ensure there was no ambiguity like Shaq has been arguing in the FTX case,” the law firm said in a statement Wednesday.

O’Neal had the process server kicked out of the arena after he was served, the firm said.

Crypto giant Binance commingled customer funds and company revenue, former insiders say

The world’s largest cryptocurrency exchange, Binance, commingled customer funds with company revenue in 2020 and 2021, in breach of U.S. financial rules that require customer money to be kept separate, three sources familiar with the matter told Reuters.

One of the sources, a person with direct knowledge of Binance’s group finances, said the sums ran into billions of dollars and commingling happened almost daily in accounts the exchange held at U.S. lender Silvergate Bank. Reuters couldn’t independently verify the figures or the frequency. But the news agency reviewed a bank record showing that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.