The Securities and Exchange Commission (SEC) has charged Sheng-Wen Cheng with allegations of defrauding investors in the offering of equity and digital asset securities, according to a complaint filed by the regulator.
According to the SEC’s complaint, from approximately August 2017 to June 2018, Cheng obtained investments totaling over $400,000 from several investors for a purported blockchain-based Peer-to-Peer lending marketplace startup that would be developed by several companies under his control, Alchemy Finance, Inc., Alchemy Company, Ltd., and Alchemy Coin Ltd.
The SEC alleges that Cheng falsely stated in offering materials that he had received a $30 million investment from a single investor. Cheng also allegedly guaranteed short-term profits on the investment in Alchemy, despite the fact that Alchemy had no actual operations or revenues at the time.
Additionally, the complaint alleges that shortly after obtaining investors’ money, Cheng transferred the majority of proceeds to his personal bank account, misappropriating approximately $300,000 of the funds for his personal use.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York. The SEC states that Cheng has consented to the entry of a judgment that enjoins him from violating the charged provisions and from participating, directly or indirectly, in any offering of a digital asset security, with monetary relief to be determined at a later date. The settlement is subject to court approval.
In a parallel action concerning similar conduct, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Cheng. Reportedly, Cheng was arrested in August of 2020 in regards to allegations of a $7 Million scam to defraud loan programs designed to assist businesses during COVID-19.