SEC takes legal action over fraudulent CoinDeal investment scheme

SEC takes legal action over fraudulent CoinDeal investment scheme

The Securities and Exchange Commission (SEC) took legal action against several individuals and entities for their involvement in a fraudulent investment scheme named CoinDeal.

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According to the SEC’s complaint, the scheme raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.

Specifically, the SEC charged Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC for their involvement in the CoinDeal investment scheme. The complaint was filed in the U.S. District Court for the Eastern District of Michigan,

According to the SEC’s complaint, Chandran, Davidson, Glaspie, Knott, and Mossel allegedly falsely claimed that investors could generate significant returns by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to a group of prominent and wealthy buyers.

These individuals allegedly disseminated false and misleading statements to investors regarding the purported value of CoinDeal, the parties involved in the supposed sale of CoinDeal, and the use of investment proceeds. This occurred from January 2019 to 2022. The complaint said that no sale of CoinDeal ever occurred, and no distributions were made to CoinDeal investors. The complaint further alleges that the defendants misappropriated millions of dollars of investor funds for personal use. It adds that Chandran used investor funds to purchase items such as cars, real estate, and a boat.

“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors,” Daniel Gregus, director of the SEC’s Chicago Regional Office, said. “As alleged in our complaint, in reality, this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”

In June 2022, the U.S. Department of Justice indicted Chandran in the U.S. District Court for the District of Nebraska on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds for his involvement in CoinDeal.

The SEC’s complaint seeks disgorgement plus pre-judgment interest, penalties, and permanent injunctions against all defendants; officer and director bars against Chandran, Davidson, Glaspie, Knott, and Mossel; and a conduct-based injunction against Chandran.

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