The U.S. Securities and Exchange Commission (SEC) has filed charges against two brothers identified as Jonathan and Tanner Adam. According to a recent announcement, the brothers allegedly put together a $60 million Ponzi scheme after creating a fake crypto asset trading platform.
Per the agency, the scheme targeted more than 80 investors over an 18-month period.
Arbitrage Scam Promised 13.5% Monthly Returns to Over 80 Investors
According to the SEC, the brothers lured unsuspecting investors with empty promises. The duo allegedly told investors that they would get very high returns — up to 13.5% monthly — on their investments. That is, for the period between January 2023 and June 2024.
Jonathan had boasted about developing a trading bot that recognizes and takes advantage of arbitrage opportunities in the crypto market. However, those claims turned out to be entirely made up. As they turned out, the claims were only a means to swindle potential victims of their hard-earned money.
Rather than help investors generate profits, the Adam brothers allegedly diverted investor funds into personal projects, mostly using them to fund their luxury lifestyle.
Tanner Adam, for instance, has reportedly used part of the stolen money, around $30 million, to construct a high-end apartment in Miami. Jonathan Adam, on the other hand, is also accused of spending at least $480,000 on luxury vehicles.
As SEC also pointed out, Jonathan ensured that investors did not know about his criminal history, having been convicted thrice for securities fraud.
SEC Swings Into Swift Action
In light of the allegations, the SEC has immediately obtained emergency asset freezes against Jonathan and Tanner Adam. The commission also extended the freeze to their individual companies, GCZ Global LLC and Triten Financial Group LLC. The idea behind this move is to ensure that there is no further loss of investor money even as the case drags in court.
If the SEC is known for anything, it is its commitment to investor protection, especially in cases such as this. And as part of that commitment, the agency has revealed its plans to seek severe penalties against the brothers. That will include permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
