The Securities and Exchange Commission (SEC) filed an administrative proceeding today against Mutual Coin Fund LLC and Usman Majeed. The fund submitted a Reg D to the SEC in late 2017.
According to the Mutual Coin Fund website, the fund apparently invested in “relatively stable cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.”
Additionally, the fund sought to diversify their portfolio into other altcoins they believed had “significant potential and long term value.”
“Instead of relying solely on fundamentals, we take a quantitative approach with algorithmic models based on big data to generate alpha. Our strategies are thoroughly backtested for success before deploying in real-time. We also research and frequently develop new trading strategies including with artificial intelligence and machine learning through neural networks.”
According to the filing by the SEC:
“from August 1, 2017 through May 1, 2018 (the “Relevant Period”), Respondents raised approximately $567,000 from 15 individual investors, residing in at least five states and in Canada. Through this offering, the investors purchased limited partnership interests in the Fund pursuant to a private placement memorandum (“PPM”) that, among other things, described the investment objective and strategy, disclosed various risk factors, and allowed periodic redemptions of the investors’ capital. In exchange, the investors were entitled to a pro rata share of any profits derived from the Fund’s investments. At least one investor in the Fund was non- accredited.”
“… As of February 28, 2019, the value of the Fund’s investments has declined to approximately $223,000, an unrealized loss of 62%.”
The SEC claims that the fund misrepresented the amount of money raised and respondents “failed to take reasonable steps as to the accuracy of these statements before disseminating them to actual and potential investors.” As part of the investment process, the SEC states that the fund did not have “pre-existing, substantive relationships” with a number of the investors and engaged in a general solicitation. At least one investor was deemed non-accredited.
The SEC stated that respondents have submitted Offers of Settlement which the Commission has determined to accept.
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