The United States Securities and Exchange Commission (SEC) has charged a group of criminals with fraud, alleging they raised $30 million through a fraudulent Initial Coin Offering (ICO), the regulator said in a press release.
According to the announcement, Boaz Manor, his business associate Edith Pardo, and two companies, CG Blockchain Inc. and BCT Inc. SEZC, have been charged with violating the anti-fraud and securities registration provisions of the federal securities laws.
The group allegedly raised over $30 million in a fraudulent ICO, which had the goal of launching hedge funds testing technology to record transactions on blockchain.
The press release further reveals that Manor hid a past criminal conviction, misrepresenting himself as “Shaun MacDonald”, and passing himself as an employee of his New Jersey-based associate Edith Pardo. The SEC said:
“As alleged, Manor, a resident of Toronto, Canada, darkened his hair, grew a beard, and used aliases to hide his identity and conceal the fact that he had served a year in prison after pleading guilty to criminal charges arising from the collapse of a large Canadian hedge fund.”
The SEC’s complaint alleges that between August 2017 and September 2018, the defendants sold digital asset securities as part of an effort to develop technologies for hedge funds and other investors in digital assets.
The complaint further alleges that at the time, the defendants claimed to have 20 hedge funds testing technology to record transactions on blockchain, while in reality they had only sent a prototype to several funds, which never used it.
Joseph G. Sansone, chief of the SEC’s Market Abuse Unit, said in a statement:
“As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets.”
The SEC further said that the U.S. Attorney’s Office for the District of New Jersey has filed parallel criminal charges against Manor and Pardo. The U.S. regulator not only seeks to bar Manor and Pardo from being officers or directors of public companies, but also disgorgement of illegally obtained profits plus interest, penalties, and injunctive relief.