The US Securities and Exchange Commission (SEC ) on Wednesday brought charges against Neil Chandran for creating and running CoinDeal, a fraudulent investment scheme that raised $45 million by selling unregistered securities.
Interestingly, there is a St. Vincent and Grenadines-based crypto exchange named CoinDeal, which is headed by Adam Bicz and Kajetan Maฤkowiak. Despite the same names, the crypto exchange and the fraudulent scheme do not have any connection.
The SEC Busts CoinDeal
In addition, the regulatory complaint named four other individuals and three entities: Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC for their involvement with the fraudulent scheme.
The SEC charged Chandran, Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo for violating the antifraud and registration provisions, while Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo are facing additional charges of aiding and abetting Chandran in certain violations. Further, Mossel and AEO Publishing are facing additional 'aiding and abetting' charges for Glaspie's violations.
Chandran, the mastermind behind the CoinDeal fraud, was first indicted by the US prosecutor last June on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds.
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CoinDeal Promoters Pulled Off a Major Fraud
According to the official complaint filed in the District Court for the Eastern District of Michigan, the five individuals, including Chandran, trapped "tens of thousands of investors" globally. They falsely promised "extravagant returns" by investing in CoinDeal, a blockchain technology "that would be sold for trillions of dollars to a group of prominent and wealthy buyers."
"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, SEC's Chicago Regional Office Director.
The five individual alleged perpetrators "allegedly disseminated false and misleading statements to investors" for four years, from January 2019 to 2022, regarding CoinDeal's value, its supposed sale, and utilization of the investment proceeds. However, there CoinDeal was never sold, and the investors did not receive any distribution of profits.
Moreover, the regulator alleged that the defendants in the complaint misappropriated millions of dollars in investors' funds. In particular, Chandran was accused of using investors' funds to purchase cars, real estate, and a boat.
The securities market regulator is now seeking recovery of the investors' funds and intends to fine the involved perpetrators.
