The U.S. Securities and Exchange Commission (SEC) recently filed charges against two brothers, Jonathan Adam and Tanner Adam, for orchestrating a $60 million Ponzi scheme. The complaint alleges that the brothers defrauded over 80 individuals by falsely claiming to operate a crypto bot that guaranteed a monthly return of 13.5%.
The SEC’s Associate Director of Enforcement in Atlanta, Justin Jeffries, revealed that the crypto bot touted by the Adams brothers was entirely fictitious. Despite promising investors that their funds would be utilized for flash loans and trades to generate profits, the brothers allegedly spent a substantial amount of the raised capital on personal indulgences such as luxury cars and a multi-million dollar condominium.
Jonathan Adam allegedly misled investors by concealing his background, which included past convictions for securities fraud. The brothers downplayed the risks associated with their scheme, assuring investors that the chances of losses were minimal. The SEC took swift action by obtaining emergency asset freezes for the brothers’ companies, GCZ Global LLC and Triten Financial Group LLC.
As a result of the SEC’s investigation, Jonathan and Tanner Adam are facing charges for violating federal securities laws’ anti-fraud provisions. The regulatory agency is seeking permanent injunctions against their companies, the return of all investor funds, and civil penalties. While Jonathan invoked the Fifth Amendment during the investigation, Tanner failed to produce any documents or cooperate with the SEC’s subpoena for testimony.
In 2023, the amount of cryptocurrency flowing into scam-related addresses decreased by $1.5 billion, signaling an 11% decline compared to the previous year. Despite this drop, Ponzi and pyramid schemes remained prevalent within the crypto space. A recent case involving NovaTech Ltd. and its principals, Cynthia and Eddy Petion, exemplifies the ongoing challenges faced by regulators in combating fraudulent schemes targeting unsuspecting investors.