August 3, 2023 at 16:04 GMTModified date: August 3, 2023 at 16:04 GMT
August 3, 2023 at 16:04 GMT

SEC charges 18 people in Utah for $50m crypto fraud

The SEC has obtained a temporary asset freeze and a restraining order against a Utah-based fraud unit selling crypto to US investors to the tune of $50million.

SEC charges 18 people in Utah for $50m crypto fraud

The SEC has announced today that is has obtained a temporary asset freeze and a restraining order against a Utah-based fraud unit selling crypto to US investors to the tune of $50million.

The action was taken against Draper, doing business as ‘DEBT Box’, as well as the company’s four main players, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson, and 13 other defendants.

The fraudulent scheme, operating since March 2021, allegedly “sold crypto asset securities to hundreds of investors and raised approximately $50m and unspecified amounts of Bitcoin and Ether”.

The unregistered securities, according to the SEC’s complaint unsealed yesterday, were know as “node licenses”.

The SEC adds: “In hundreds of online videos and social media posts, as well as at investor events, the defendants told investors that the node licenses would generate various crypto asset tokens through crypto mining activity and that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined, resulting in exorbitant gains for investors.

“In reality, as alleged, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.”

Tracy S. Combs, director of the SEC’s Salt Lake regional office said: “We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining.”

“We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”

The SEC’s filing further alleges that DEBT Box and its principals — along with defendants James Franklin, Western Oil Exploration Company Inc., and Ryan Bowen — “lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens”.

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