SEC Sues Crypto Broker Owner, Sellers Over Alleged Fraud

  • Company owner Brian Amoah and two other staff were not registered as brokers
  • Investors were charged undisclosed markups and were not told about financial issues with BXY’s issuer

The Securities and Exchange Commission (SEC) continues to pursue legal action against bad actors in the crypto industry as regulators move to strengthen investor protection laws.

Chicago Crypto Capital and three of its employees have been charged with defrauding investors by offering unregistered crypto-asset securities, an announcement said Wednesday.

Crypto broker owner Brian Amoah and former Darcas sellers Oliver Young and Elbert “Al” Elliott allegedly acted as illegal brokers by offering unregistered Beaxy tokens (BXY), helping them raise $1.5 million from 100 inexperienced investors between August 2018 and November. 2019.

BXY was issued by former crypto exchange Beaxy, which reportedly entered into an agreement with Chicago Crypto Capital in August 2018 to sell these tokens.

But the SEC said BXY was not registered with the Commission, nor did it meet the exemption criteria. Furthermore, none of the parties involved was an eligible broker.

The company allegedly made false statements to investors regarding custody and delivery of BXY tokens, additional fees charged by the company, their personal investments in BXY, and financial issues with issuer Beaxy.

“Each of these inaccuracies would be information that a reasonable investor would want to know,” the regulator wrote in its complaint.

As a result, some investors never managed to secure their BXY holdings, and all investors ended up paying an unknown amount on their tokens, the SEC said.

So far, only Young has agreed to settle with the regulator for an undisclosed sum.

Chicago Crypto Capital sells crypto-assets and promotes other blockchain-related investments. Its website describes itself as a consulting firm created to explore decentralized finance.

Crypto-related enforcement actions have intensified in recent months after liquidity issues in the industry. SEC Chairman Gary Gensler reiterated this week that crypto firms should register with regulators. He said the vast majority of the nearly 10,000 tokens on the market are securities, and he instructed staff to work with crypto entrepreneurs to get their tokens registered.

CCC did not return Blockworks’ request for comment before press time.


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  • Shalini Nagarajan

    blockages

    Journalist

    Shalini is a crypto journalist from Bangalore, India who covers market developments, regulation, market structure, and advice from institutional experts. Prior to Blockworks, she worked as a markets reporter at Insider and a correspondent at Reuters News. She holds bitcoin and ether. Join her at [email protected]

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