The Securities and Exchange Commission (SEC) has filed charges against Kristijan Krstic, founder of Start Options and Bitcoiin2Gen, and John DeMarr, said to be the primary U.S.-based promoter for these companies, for fraudulently induced investors to buy digital asset securities.
The complaint states that Krstic is a Serbian-Australian national who was domiciled in the Philippines during the relevant period and is currently in custody in Serbia. Krstic is said to have used an alias “Felix Logan.”
In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York and the Department of Justice, Fraud Section, today announced criminal charges against DeMarr.
The SEC claims that from December 2017 to January 2018, Krstic and DeMarr touted Start Options’ purported digital asset mining and trading platform. According to the SEC’s complaint, the duo falsely claimed Start Options was “the largest Bitcoin exchange in euro volume and liquidity” and “consistently rated the best and most secure Bitcoin exchange by independent news media.”
The SEC also alleges that Krstic and DeMarr promoted Bitcoiin2Gen’s initial coin offering (ICO) of B2G tokens that the SEC alleges were unregistered securities.
A third individual, Robin Enos, working with DeMarr, allegedly drafted fraudulent promotional materials that Enos knew would be disseminated to the investing public. The SEC states that these materials allegedly contained numerous false statements, including that the B2G tokens would be deliverable on the Ethereum blockchain, that the invested funds would be used to develop a coin that was “mineable,” and that the tokens would be tradeable on a proprietary digital asset trading platform at the platform’s “launch” in early April 2018.
The SEC states that these claims about the B2G tokens were false and that Bitcoiin2Gen was a sham, and Krstic and DeMarr allegedly misappropriated millions of dollars of investor funds for their own personal benefit.
Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, stated:
“The conduct alleged in this action was a blatant attempt to victimize those interested in digital asset technology and these defendants should be held accountable. In reality, we allege, these ventures were fraudulent enterprises aimed simply at misappropriating funds from investors.”
