The Securities and Exchange Commission launched a lawsuit again two advisory companies and their owner for running a Ponzi-like cryptocurrency scheme.
The firms operated for over four years and manage to raise nearly $4.4 million.
- The lawsuit is against Creative Advancement LLC and Edelman Blockchain Advisors LLC as well as their owner – Gabriel Edelman.
- The allegations claim that Edelman, through his companies, “fraudulently offered and sold securities, using false, misleading statements” from February 2017 to May 2021.
- The SEC believes he raised $4,390,000 from at least four investors during those four years.
- Edelman promised that these funds would be invested in cryptocurrencies, which would have been purchased at discounted promises.
- However, the Commission alleged he invested “only a small portion of investor funds in digital assets” and used the majority to fund his “own personal benefit,” including paying off credit cards or sending money to family members.
- Additionally, the SEC asserted that Edelman operated a “Ponzi-like” scheme, repaying early investors with some of the new investors’ funds to “encourage their ever-larger investments.”
- The agency’s lawsuit alleges Edelman committed securities fraud and requested the court to permanently restrain him from “engaging in the acts, practices, and courses of business alleged herein.”
- The SEC lawsuit, which claims that Edelman is currently residing in Spain, explained how one of the Ponzi-like moves worked:
For example, one Investor initially invested $50,000. Edelman returned $75,000 within a few months, and the Investor subsequently invested an additional $600,000. Edelman then returned $720,000 a few months later. After that, the Investor invested $1,000,000–based on purported past performance and Edelman’s promise that the Investor would receive a 15% return. Thereafter, Edelman did not return any funds to that Investor.