The US Securities and Exchange Commission (SEC) has recently taken legal action against two brothers, John and Jonatan Chain, for their alleged involvement in a cryptocurrency Ponzi scheme. The pair supposedly defrauded over $60 million from investors via their company, CG Blockchain Inc., promising a whopping 900% return on investment. The SEC has charged them with violating the anti-fraud and registration provisions of federal securities laws.
According to the SEC, the brothers lured in investors by falsely claiming to have developed a fully automated cryptocurrency trading platform. They projected impressive returns in a short period and also lied about their professional affiliations to reputed Wall Street firms to gain credibility. The brothers are said to have used the cash influx from new investors to pay off the initial investors, a typical characteristic of a Ponzi scheme.
The SEC’s crackdown on fraudulent crypto schemes is a warning to potential scammers and a reassurance to investors about the regulator’s commitment to maintaining market integrity. The Chain brothers’ case emphasizes the necessity for investors to conduct in-depth research before getting involved with cryptocurrency investments. Meanwhile, the SEC continues to educate investors about the risks associated with digital assets, reinforcing that high-return investments carry high risks.
