The U.S. Securities and Exchange Commission (SEC) recently filed a complaint against two brothers, Jonathan Adam and Tanner Adam, for orchestrating a $60 million Ponzi scheme. The complaint, lodged on August 26 in the United States District Court for the Northern District of Georgia in Atlanta, alleges that the siblings defrauded over 80 individuals by falsely promoting a crypto bot that claimed to generate a monthly return of 13.5% for investors.
The Adams brothers deceived investors between January 2023 and June 2024 by asserting that their bot could identify arbitrage opportunities across various platforms. They assured investors that their funds would be utilized in a lending pool for flash loans and trades, with assets borrowed and repaid in a single blockchain transaction. However, the SEC’s Associate Director of Enforcement, Justin Jeffries, revealed that the bot was entirely fictitious, and the brothers misappropriated a significant portion of the raised funds.
Rather than engaging in trading activities, Jonathan and Tanner allegedly squandered $53.9 million on lavish expenses, such as luxury vehicles and a multimillion-dollar condominium. Jonathan also concealed his background, which included three prior convictions for securities fraud, from investors to maintain their trust. The brothers assured users that the investment carried minimal risk, aside from a global market collapse.
To halt the fraudulent scheme, the SEC obtained emergency asset freezes for the brothers’ entities, GCZ Global LLC and Triten Financial Group LLC. The regulatory agency has charged Jonathan and Tanner with violating anti-fraud provisions of federal securities laws and is seeking permanent injunctions against their companies, the return of all investor funds, and financial penalties. While Jonathan invoked the Fifth Amendment in response to a subpoena for testimony, Tanner failed to provide documents or testimonies during the SEC’s investigation.
In 2023, the amount of cryptocurrency sent to scam-related addresses decreased by $1.5 billion, signaling an 11% decline from the previous year. Ponzi and pyramid schemes remained prevalent forms of fraud within the cryptocurrency space. Recently, the SEC brought charges against NovaTech Ltd. and its principals, Cynthia and Eddy Petion, for defrauding over 200,000 individuals. Investors were promised safe investments in crypto and foreign exchange markets, but they never received the profits as advertised.
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