The Securities and Exchange Commission has uncovered a massive pyramid scheme involving several fraudulent entities. The alleged scheme involved offering e-coin “mining packages” that promised to pay daily returns of 1% for up to a year. As you might expect, they found plenty of takers.
How many investors signed up? The SEC has counted 65,535 worldwide. The scammers managed to extract at least $8.1 million by selling “mining packages,” plus an additional $3.2 million in fees. The SEC alleges they used that money to live lavishly and buy Lamborghinis, real estate and yachts.
The alleged scam started around January 2018. MCC International Corp. (MCC), which was doing business as Mining Capital Coin Corp., its two founders, and two other entities have all been charged with making unregistered securities offerings and selling fraudulent investment plans. A federal district court has issued a temporary restraining order against the defendants and frozen their assets.
MCC, the entity allegedly offering the “mining packages” with the incredible 1% daily return, claimed these returns were the result of profit sharing in the company’s e-coin mining and trading business. Then things began to get complicated.
Initially, according to the SEC, MCC investors were told their returns would be paid in Bitcoin, a third-party e-coin that is mainstream. However, the defendants instead paid in Capital Coin, an e-coin created by MCC. Capital Coin was probably worthless, but that wasn’t the end of it.
When the investors wanted to trade their Capital Coin for cash, MCC required them to use a crypto asset trading platform called Bitchain. In reality, one of MCC’s founders allegedly created Bitchain to further the fraud. The investors were given one-year memberships to Bitchain, but when they tried to use the platform, errors stymied their efforts. Ultimately, as their memberships were set to expire, the investors were directed to buy another mining package or their entire investment would be forfeited.
The SEC has charged the alleged scammers with multiple offenses. It is seeking to bar the two founders from all further securities activities, injunctions against further violations, disgorgement of the ill-gotten gains and civil penalties.
If it’s too good to be true, it probably isn’t
The SEC is responsible for the government’s enforcement of securities laws. In this case, it seems to have identified a number of investors and frozen substantial assets, and some of those assets may be distributed among the known investors.
If you have been victimized by securities fraud, you don’t have to wait for the SEC to distribute seized assets. You may have recourse against the perpetrator of the fraud through the Financial Industry Regulatory Authority (FINRA) or the courts.