SEC freezes assets of crypto bot operators in suspected Ponzi scheme

The U.S. Securities and Exchange Commission (SEC) has taken action against Jonathan and Tanner Adam, freezing their assets amid allegations that the brothers operated a $60 million Ponzi scheme under the guise of a cryptocurrency trading bot.

The SEC claims that over 80 investors across the United States were defrauded by promises of high monthly returns, while the funds were allegedly diverted for personal luxuries.

According to the SEC’s complaint, between January 2023 and June 2024, the Adam brothers, through their companies GCZ Global LLC and Triten Financial Group LLC, falsely assured investors of returns up to 13.5 percent per month using a crypto trading bot.

However, the SEC alleges that the trading bot and the investment pool described to investors were fictitious, and the collected funds were instead misappropriated for personal expenditures and to make Ponzi-like payments to earlier investors.

Justin C. Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office, emphasised the deceptive nature of the scheme, noting that the Adam brothers lured investors with the promise of lucrative returns on non-existent crypto investments.

The SEC’s investigation revealed that the brothers used the investor money to purchase luxury items, including designer goods, recreational vehicles, and expensive real estate.

The complaint details that Tanner Adam allegedly used $30 million of investor funds to buy a condominium in Miami, while Jonathan Adam is accused of spending $480,000 on vehicles.

These actions, according to the SEC, demonstrate a clear misuse of investor funds for personal gain.

In response to the SEC’s allegations, the court has granted emergency asset freezes, which the defendants did not oppose.

The SEC is now pursuing permanent injunctions, the disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the Adam brothers for their violations of securities laws.

The case underscores the SEC’s ongoing efforts to crack down on fraudulent schemes in the cryptocurrency space and protect investors from such predatory practices.