The Securities and Exchange Commission (SEC) has filed fraud charges against CoinDeal and its creators involving $45 million in a crypto plot.
The SEC has charged Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC for their involvement in the scheme that alleges the sales of unregistered securities to tens of thousands of investors in the US as well as internationally.
The SEC alleges that the defendants claimed their blockchain technology, CoinDeal, would be sold for “trillions of dollars.” From approximately January 2019 to 2022, Chandran, Davidson, Glaspie, Knott, and Mossel allegedly disseminated false and misleading statements to investors regarding the purported value of CoinDeal, the parties involved in the supposed sale of CoinDeal, and the use of investment proceeds.
Once again, the SEC’s complaint includes claims that misappropriated funds were used for personal use, such as cars, a boat, and real estate.
The complaint states:
“Chandran received at least $37 million in investor funds for CoinDeal. Chandran and the Chandran Entities misappropriated investors’ funds to purchase, among other items, a fleet of luxury vehicles, various real estate properties in California and Nevada, and a boat.”
In 2021 and 2022, several states filed cease and desist orders, but the defendants continued unheaded.
The CoinDeal ploy fell apart in June 2022 when the US Department of Justice indicted Chandran for wire fraud and money laundering and froze his assets.
“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors,” said Daniel Gregus, Director of the SEC’s Chicago Regional Office. “As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors.”
The SEC’s complaint charges:
- Chandran, Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with violating the antifraud and registration provisions of the Securities Act and Exchange Act;
- Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with aiding and abetting certain of Chandran’s violations of the antifraud provisions of the Exchange Act; and
- Mossel and AEO Publishing with aiding and abetting Glaspie’s violations of the antifraud and registration provisions of the Securities Act and Exchange Act.
The SEC’s complaint seeks disgorgement plus pre-judgment interest, penalties, and permanent injunctions against all defendants; officer and director bars against Chandran, Davidson, Glaspie, Knott, and Mossel; and a conduct-based injunction against Chandran.