SEC Obtains Asset Freeze Regarding BKCoin Management and Kevin Kang, Alleges Crypto Fraud

The Securities and Exchange Commission has obtained an asset freeze in an emergency action regarding BKCoin Management, a digital asset hedge fund, and principal Kevin Kang.

Kang was reportedly fired from BKCoin last October for allegedly misappropriating assets.

Kang co-founded BKCoin and, at one point, was one of its managing members. He is also a certified financial advisor.

According to the SEC, Kang and BKCoin, from October 2018 to September 2022, raised $100 million from 55 investors. While claiming to act on the interest of the investors, Kang allegedly operated a Ponzi scheme using some of the funds for personal use.

The SEC complaint was filed on February 23, 2023, regarding the case and was unsealed today. The complaint claims that Kang and BKCoin made $3.6 million “Ponzi-like payments to fund investors.”

At the same time, the defendants used at least $371,000 of investor money to pay for sporting events, vacations, and a New York City apartment.

The SEC alleges that Kang attempted to conceal the unauthorized use of investor money by providing altered documents with inflated bank account balances to the third-party administrator for certain of the funds.

The SEC adds that BKCoin misrepresented that it had been audited by a top auditor when in fact no audit opinion had been rendered.

Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said the actions taken by the SEC highlights their continued commitment to protecting investors and “uprooting” fraud, including crypto.

The SEC’s complaint, filed in the United States District Court for the Southern District of Florida, alleges that BKCoin and Kang violated the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctions against both of the defendants; disgorgement, prejudgment interest, and a civil penalty from both of the defendants; and an officer and director bar and conduct-based injunction against Kang.

The complaint names as relief defendants and seeks disgorgement from, each of the funds and Bison Digital LLC, an entity that allegedly received approximately $12 million from BKCoin and the funds.

The court also granted emergency relief against the relief defendants, which the SEC sought, including the appointment of a receiver.

 


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