The U.S. Securities and Exchange Commission today charged brothers Jonathan and Tanner Adams with conducting $60 million in pyramid scheme under the guise of a cryptocurrency investment opportunity.
The Aug. 27, 2024 case shows that investors in the fast-paced, wild world of cryptocurrencies still face challenges. The brothers allegedly promised incredible returns on value, which sucked more than 80 investors into their high-flyer trading bot scheme that never actually existed.
Plan solved
The SEC complaint alleges that between January 2023 and June of this year, the Adamses reported that their proprietary bot had monthly returns of 13.5%. They told investors their money would be used in a “loan pool,” where the instant loans would buy securities and sell them for uncomplicated profit.
According to the SEC, the trading bot was a mirage, and the trading strategy is a concocted scheme. The brothers are also accused of not using the money for investments. Instead, the two allegedly used most of the money to fund their costly lifestyles, the most notable example being two luxury cars and a multi-million dollar apartment.
The U.S. Securities and Exchange Commission (SEC) is freezing assets in a $60 million Ponzi scheme run by brothers
The U.S. Securities and Exchange Commission (SEC) announced on its official website that it has obtained an emergency asset freeze for Jonathan Adam and Tanner Adam and their companies, GCZ Global LLC and…
— Coinness Global (@CoinnessGL) August 27, 2024
Luxury life through deception
The U.S. Attorney’s Office reports that of the $61.5 million, $53.9 million was diverted through the Adamses. They spent the money on extravagant purchases, leaving investors with less than they invested.
Most of the money was used to pay out previous investors, Ponzi style, a sign of fraud. The SEC took action to freeze the brothers’ assets and also sought lasting injunctions against their companies, GCZ Global, LLC and Triten Financial Group LLC.
Total crypto market cap at $2.16 trillion on the daily chart: TradingView.com
Background hidden
Now, the case becomes murkier with a shocking revelation about Jonathan Adam’s past. He is also said to have invented his past to charm investors, hiding three previous convictions for securities fraud.
The pretense exacerbated the more solemn allegations against him and his brother. It was a “virtually nonexistent” risk, they told investors, deepening the betrayal of trust.
Indeed, the work done by the SEC is stark evidence of the risks investors are taking in the cryptocurrency market, especially in a market rife with scams.
More general implications for cryptocurrency investments
This isn’t a case of Adams, but rather a broader reflection of the cryptocurrency sphere. According to blockchain intelligence firm TRM Labs, in 2022 alone, Ponzi schemes and other scams around the world raked in a combined $7.8 billion.
The SEC’s crackdown on Adams highlights how careful investors need to be when spending and doing due diligence before investing money. As many cryptocurrencies are still maturing in the marketplace, the potential for fraud is huge.
The swift prosecution of this case is driven by concerns about investor protection and maintaining market integrity. As the cryptocurrency landscape continues to evolve, regulatory oversight is becoming increasingly significant.
Investors must remain vigilant in navigating this sophisticated and often unsafe landscape. The charges against Jonathan and Tanner Adam serve as a warning to those tempted to invest in cryptocurrency and other online investment opportunities that all that glitters is indeed not gold.
Featured image from Entrepreneur, chart from TradingView
