SEC Charges Brothers With $60 Million Crypto-Based Ponzi Scheme
To halt an alleged $60 million Ponzi scheme impacting more than 80 investors across the country, the U.S. Securities and Exchange Commission announced it has obtained emergency asset freezes against 42-year-old Jonathan Adam, a resident of Angleton, Texas, and his brother, 38-year-old Tanner Adam, a resident of Miami, Fla., and against their respective entities: GCZ Global LLC and Triten Financial Group LLC.
The SEC’s complaint alleges that the Adam brothers solicited and lured victims with the promise of up to 13.5 percent monthly investment returns from January 2023 to June 2024. According to the complaint, the duo falsely told investors that Jonathan Adam had created a “bot” that operated on a crypto asset trading platform to identify arbitrage trading opportunities, and that investor funds would be used in a lending pool that would, through smart contracts, fund “flash loans” to complete these arbitrage trades. The Adam brothers allegedly told investors that, short of a global market meltdown, investor funds were safe.
Specifically, the Adam brothers told investors that their funds would first be wired to Kraken, another crypto asset trading platform, where the U.S. dollars would be exchanged for the crypto asset Tether. Investors allegedly believed that following the conversion, the Tether would be promptly deployed through a crypto wallet to the lending pool.
The SEC alleges that, in reality, the lending pool as described to investors did not exist, and the defendants instead used millions of dollars of investor funds to pay supposed returns to existing investors and to support their lavish lifestyles. For example, the complaint alleges that Tanner Adam used investor funds to make the down and installment payments to build a $30 million condominium in Miami, and Jonathan Adam used at least $480,000 of investor funds to purchase cars, trucks, and recreational vehicles.
The SEC’s complaint also alleges that Jonathan Adam misrepresented his background in order to gain the trust of investors and failed to tell investors that he had previously been convicted of three counts of securities fraud, sentenced to 50 months in prison, and ordered to pay $314,500 in restitution.
“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,” said Justin C. Jeffries, associate director of enforcement in the SEC’s Atlanta office. “The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors.”’
The SEC’s complaint, filed on Aug. 26, 2024, in the U.S. District Court for the Northern District of Georgia, charges Jonathan Adam, Tanner Adam, GCZ Global LLC, and Triten Financial Group LLC with violating the antifraud provisions of the federal securities laws. In addition to the emergency relief granted by the court, which the defendants did not oppose, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.
Click here to visit The DI Wire directory page.
