The Securities and Exchange Commission (SEC) has charged Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott for their involvement in a crypto investment scheme named CoinDeal that raised more than $45m (£37m, €42m) from sales of unregistered securities to tens of thousands of investors worldwide.
The US regulator also charged AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo.
According to the SEC’s complaint, Chandran, Davidson, Glaspie, Knott, and Mossel “falsely claimed that investors could generate extravagant returns by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to a group of prominent and wealthy buyers”.
From January 2019 to 2022, Chandran, Davidson, Glaspie, Knott, and Mossel allegedly “disseminated false and misleading statements to investors” regarding the value of CoinDeal, the parties involved in the supposed sale of CoinDeal, and the use of investment proceeds.
According to the complaint, no sale of CoinDeal ever occurred and no distributions were made to CoinDeal investors. The complaint further alleges that the defendants collectively misappropriated millions of dollars of investor funds for personal use, and that Chandran used investor funds to purchase items such as cars, real estate, and a boat.
The SEC’s complaint charges:
- Chandran, Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with violating the antifraud and registration provisions of the Securities Act and Exchange Act;
- Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with aiding and abetting certain of Chandran’s violations of the antifraud provisions of the Exchange Act; and
- Mossel and AEO Publishing with aiding and abetting Glaspie’s violations of the antifraud and registration provisions of the Securities Act and Exchange Act.
Daniel Gregus, director of the SEC’s Chicago regional office, said: “We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors.
“As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
In June 2022, the US Department of Justice indicted on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds for his involvement in CoinDeal.
The SEC’s complaint seeks disgorgement plus pre-judgment interest, penalties, and permanent injunctions against all defendants; officer and director bars against Chandran, Davidson, Glaspie, Knott, and Mossel; and a conduct-based injunction against Chandran.