SEC Charges Siblings in $124 Million Crypto Fraud Operation
The Securities and Exchange Commission has charged siblings John and JonAtina (Tina) Barksdale with defrauding thousands of retail investors out of more than $124 million.
The Securities and Exchange Commission has charged siblings John and JonAtina (Tina) Barksdale with defrauding thousands of retail investors out of more than $124 million through two unregistered fraudulent offerings of securities involving a digital token called “Ormeus Coin.”
According to the SEC’s complaint, from June 2017 through the present, the Barksdales offered and sold Ormeus Coin to investors on crypto trading platforms. In addition, through a multi-level marketing business called Ormeus Global, the siblings purportedly offered and sold subscription packages that included the digital token and an investment in a crypto trading program.
The SEC claims that to promote the offerings, John Barksdale held roadshows around the world while he and his sister led the production of social media posts, YouTube videos, press releases, and other promotional materials.
The SEC alleges that at the events, in the produced materials, and currently on the website, the siblings falsely claimed that the token was supported by one of the largest crypto mining operations in the world, although they abandoned their mining operations in 2019 after generating less than $3 million in total revenue.
In many of these investor communications, the defendants falsely stated that Ormeus Coin had a $250 million crypto mining operation and was producing $5.4 million to $8 million per month in mining revenues, the SEC alleges.
Further, according to the SEC, to preserve the fiction that Ormeus Coin was successfully mining crypto, the Barksdales arranged for a public website to display a wallet of an unrelated third party showing more than $190 million in assets as of November 2021, while the wallets were actually worth less than $500,000. The regulator also claims that the pair manipulated Ormeus Coin’s price and misused millions of dollars of investor funds for personal expenses.
“We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit,” said Melissa Hodgman, associate director in the SEC’s Division of Enforcement. “We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products.”
The complaint was filed in the U.S. District Court for the Southern District of New York and charges the Barksdales with violating the federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against John Barksdale.
