ICO fraud case study

Confido, an unregulated ICO startup, raised 375,000 USD, promised “guaranteed returns”, and according to bitcoin.com latest article Confido’s tokens are worthless. Moreover,  the Company’s website and social media accounts (including the owner account) were deleted.

The $375,000 “exit” scam highlights the risks that are inherent to the still largely unregulated ICO market.

Charity and Frauds

For your attention, Charity and Frauds can go together.

According to the the press release, at SEC charges, “successful trader” and fraud, the defendants raised approximately $5.3 million from investors who were told that the defendant was a retired, successful hedge fund manager who intended to day trade their funds using a proprietary algorithm. Claiming he no longer needed income and instead wanted to help friends and charitable causes, the defendant told investors that he would fund his wife’s charitable organization, and divide the remaining profits among investors.

The SEC alleges that the funds were used to pay the defendants’ personal expenses. According to the complaint, the charity Foundation was a sham entity that never conducted any legitimate business.

Moreover, the defendant incurred substantial trading losses while falsely assuring investors that trading was profitable. To hide the losses the defendants generated and distributed fabricated account statements.

Snack Company Investment Scam

The Securities and Exchange Commission charged three individuals who defrauded investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co.

The defendants falsely promised investors that after being acquired, Starship Snack Corp. investors would get a one-to-one exchange of Starship shares for Monster or Coca-Cola shares. Moreover, the defendants falsely claimed that investors had “no down-side risk” and that investors could get their investment back with 5 percent interest if the shares failed to appreciate over a year.

According to the SEC’s complaint, Starship had no agreement with Monster Energy or Coca-Cola , and the defendants used investor funds as their own personal piggy bank, spending them to rent and decorate a New York City apartment, and on travel, meals, and other personal expenses.

Please find attached a link for the full story Snack Company Investment Scam


The Securities and Exchange Commission charged a businessman and two companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds.

The SEC alleges that the defendants and his companies have been selling unregistered securities, and the digital tokens or coins being peddled don’t really exist. According to the SEC’s complaint, investors in REcoin Group Foundation and DRC World (also known as Diamond Reserve Club) have been told they can expect sizeable returns from the companies’ operations when neither has any real operations.

“Investors should be wary of companies touting ICOs as a way to generate outsized returns,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “As alleged in our complaint, Zaslavskiy lured investors with false promises of sizeable returns from novel technology.”

Please find attached a link for the full story ANOTHER ICO SCHEME

Another Pump-and-Dump Market Manipulation Scheme

SEC Charges Microcap Company and its Promoters in Pump-and-Dump Market Manipulation Scheme.

According to the complaint, the defendants opened brokerage accounts in the names of nominees in order to sell their stock and, when they deposited the Company’s shares into the accounts, they lied about how much stock they owned, how they obtained it, and the relationship of the nominees to them. The complaint further alleges that the defendants organized and implemented a promotional campaign, including email blasts and a boiler room that targeted senior citizens. The Company’s stock price increased, from $0.93 per share on September 30, 2014 to $1.62 per share on May 1, 2015, during which time the defendants dumped their shares through the nominees, earning them net illegal profits of about $3.1 million.

Please find attached a link for the full story Pump-and-Dump Market Manipulation Scheme

Charges from the SEC

Please find below 2 charges from the SEC:

  1. The Securities and Exchange Commission announced that it has charged a former financial adviser with defrauding investors and spending their money on herself and to make Ponzi-like payments to earlier investors in the alleged scheme.
    Please find attached a link for the full story Former Financial Adviser Charged With Defrauding Investors
  2. The Securities and Exchange Commission charged a sports radio personality and another New York City man with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets.
    Please find attached a link for the full story Radio Host Charged With Concert Ticket Investment Scam

The U.S. Commodity Futures Trading Commission (CFTC) latest charges

Please find below the latest charges:

  1. CFTC Charges Monex Deposit Company, its Affiliates, and their Principals in Multi-Million Dollar Fraudulent Precious Metals Scheme.
    CFTC alleges that defendants deceived thousands of retail customers who lost hundreds of millions of dollars in connection with illegal, off-exchange leveraged precious metals transactions.
    Please find attached a link for the full story Monex Multi-Million Dollar Fraudulent Precious Metals Scheme
  2. CFTC Charges South Carolina Resident Thomas Lanzana, Florida Resident Nikolay Masanko, and Their Companies Blackbox Pulse, LLC and White Cloud Mountain, LLC with Fraud, Misappropriation, and Registration Violations.
    Lanzana and Masanko Allegedly Operated a Ponzi Scheme that Defrauded Off-Exchange Foreign Currency Derivatives Customers of at Least $700,000.
    Please find attached a link for the full story Lanzana and Masanko Ponzi Scheme that Defrauded Off-Exchange Foreign Currency Derivatives Customers

Digital Bitcoin Mining Fraud

Former Connecticut Resident Pleads Guilty to Criminal Charges in Connection With Digital Bitcoin Mining Fraud.

The SEC alleged that GAW Miners and ZenMiner, along with their principal, Garza, purported to offer shares to investors in their digital bitcoin mining operation. Mining for bitcoin or other virtual currencies means applying computer power to try to solve complex equations that verify a group of transactions in that virtual currency. The first computer or collection of computers to solve an equation is awarded new units of that virtual currency. According to the SEC’s complaint, GAW Miners and ZenMiner did not own enough computing power for the mining they promised to conduct, so most investors paid for a share of computing power that never existed. Returns paid to some investors came, not from successful mining activity, but from proceeds generated from sales to other investors.

Please find attached a link for the full story Digital Bitcoin Mining Fraud

SEC Charges Two Brothers With Conducting an Offering Fraud

According to the SEC’s complaint, Michael and Brian Quigley convinced overseas investors to send money to U.S. bank accounts for purported investments in various securities, including well-known issuers, investment funds and penny stock companies, and claimed to be associated with entities that did not in fact exist, including fictional broker-dealers. The SEC alleges that the Quigleys did not make any investments with the money, and instead simply stole the investors’ funds.

Please find attached a link for the full story SEC Charges Two Brothers With Conducting an Offering Fraud