SEC Files Charges Against Tampa Businessman for Crypto Fraud
The Securities and Exchange Commission has charged a Tampa businessman with fraud related to a crypto service that he piloted. The defendant founded a company known as Digital World Exchange that was meant to be a crypto exchange for cryptocurrency. Federal agents claim the defendant engaged in a fraudulent scheme involving unregistered offers and sales of crypto asset securities called DWE and BPC. Investors lost an alleged $1 million in proceeds when the defendant pulled their assets out of the exchange.
According to authorities, the scam occurred between February of 2018 and April of 2021. The defendant promoted three separate business entities related to the fraud. One was Digital World Exchange, and another was Boostedpro LLC. Each of the businesses are alleged to have included a crypto asset trading platform and an in-house exchange token or crypto asset security the value of which depended on the successful launch of the trading platform.
Materially false and misleading statements
The defendant is accused of defrauding investors by making materially false and misleading statements to investors concerning the defendant’s level of expertise, technological experience, and wealth. He also downplayed the risks involved with the investment according to authorities. His LinkedIn page says he was a software programmer for the NSA and obtained an MBA from Florida International University.
As an example of a fraudulent claim, the defendant claimed that his crypto tokens were backed by gold, Bitcoin, and other assets that he held. However, the coins were not backed by anything. In a video that he released in 2019, the defendant claimed that his security tokens were backed by $10 million in Bitcoin assets. The defendant never held more than $37,000 worth of Bitcoin. DWE, the company that he ran, purchased around $100,000 in gold. So the amount never came close to the $10 million in backing he claimed the tokens held.
Understanding the fraud charges
In this case, the defendant is accused of making materially false claims to investors to encourage their investments in his crypto platform. He lied on numerous occasions regarding his own expertise in technological matters and claimed his business was backed by $10 million in Bitcoin. It wasn’t. For that reason, the SEC charged him with securities fraud.
Those who make materially false statements to investors can be charged by the federal government with fraud. Fraud is knowingly misleading individuals into believing that an investment is stable when it is not. In this case, the defendant lied about the backing of his internal coin and never deposited silver or gold with a bank to back the initial coin offering. So, in a very basic sense, he just lied to his investors.
Talk to a Federal Fraud Criminal Defense Attorney Today
The Tampa criminal defense attorneys at The Matassini Law Firm represent the interests of those charged with fraud by the federal government. Call our office today to schedule an appointment, and we can begin discussing your defense strategy immediately.