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SEC Charges Creator and Promoters of Crypto Ponzi Scheme with $295 Million Fraud

The Securities and Exchange Commission charged Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor and Jonathan Tetreault for their roles in Trade Coin Club, a fraudulent crypto Ponzi scheme that raised more than 82,000 bitcoin.

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The Securities and Exchange Commission charged Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor and Jonathan Tetreault for their roles in Trade Coin Club, a fraudulent crypto Ponzi scheme that raised more than 82,000 bitcoin, valued at $295 million at the time, from more than 100,000 investors worldwide.

According to the SEC’s complaint, Braga created and controlled Trade Coin Club, a multi-level marketing program that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot. The SEC alleges that Braga and Paradise lured investors with false representations that the bot made “millions of microtransactions” every second, and that investors would receive minimum returns of 0.35% daily.

However, instead of deploying investor funds for the purported trading bot, Braga allegedly used investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters, including Paradise, Taylor and Tetreault.

The SEC further alleges that Trade Coin Club operated as a Ponzi scheme and that investor withdrawals came entirely from deposits made by investors, not from any crypto asset trading activity by a bot or otherwise. The complaint further alleges that Braga personally received at least 8,396 bitcoin of the amounts invested which was worth $55 million at the time. Paradise received 238 bitcoin which was worth more than $1.4 million at the time and Taylor received 735 bitcoin which was worth more than $2.6 million. Tetreault received 158 bitcoin which was worth more than $625,000.

“We allege that Braga used Trade Coin Club to steal hundreds of millions from investors around the world and enrich himself by exploiting their interest in investing in digital assets,” said David Hirsch, chief of the Enforcement Division’s Crypto Assets and Cyber Unit. “To ensure our markets are fair and safe, we will continue to use blockchain tracing and analytical tools to aid us in the pursuit of individuals who perpetrate securities fraud.”

The SEC’s complaint alleges that Braga violated the antifraud and securities registration provisions, Paradise violated the antifraud, securities registration, and broker-dealer registration provisions and Taylor violated the securities and broker-dealer registration provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement, and civil penalties.

The SEC filed a second complaint alleging that Jonathan Tetreault violated the securities and broker-dealer registration provisions of the federal securities laws. Without admitting or denying the allegations, Tetreault agreed to settle the SEC’s charges. The settlement is subject to court approval.

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