SEC Charges Novatech in $650 Million Crypto Fraud Scheme

August 12, 2024 Bitcoin.com

SEC takes action against two meme stock wash traders

September 28, 2021 Coin Telegraph

AMC

The SEC asserts that the defendants unlawfully gleaned more than $700,000 through a wash-trading scheme that targeted exchanges offering market maker rebates.

The U.S. Securities and Exchange Commission has filed a complaint against two Robinhood users over an alleged wash-trading-based arbitrage scheme that utilized meme stocks.

According to a Sept. 27 complaint, defendants Suyun Gu and Yong Lee took advantage of differing trading fee schedules offered by different retail brokers and exchanges to extract arbitrage while wash-trading.

By trading between venues that offer rebates to market makers and those that do not charge fees to market takers, the SEC estimates they generated more than $1.5 million worth of rebates in total through the alleged wash trading scheme.

Gu and Lee are believed to have been able to keep nearly half of the rebates as profits, with the commission estimating they profited $668,671 and $51,334 respectively while wash-trading during February through April of this year. The pair are believed to have executed 11,400 and 2,300 trades through the scheme respectively.

The pair are accused of targetting put options contacts for popular meme stocks including GameStop (GME) and AMC Entertainment (AMC). According to the complaint:

“Gu and Lee Believe that other marker participants’ interest in buying ‘meme stocks’ and related price increase would make put options on those stocks less attractive, making it easier for Gu and Lee to trade with themselves.”

While the trading venues used by the pair are not explicitly named in the court documents, it appears the pair were using the popular fee-free investment app Robinhood. The documents state that Gu concocted the scheme after watching the CEO from “Broker-dealer B” outline in a February court testimony that his firm does not charge taker fees to its customers — the same month that Robinhood CEO Vlad Tenev testified before congress regarding market volatility related to GME and other meme stocks.

So-called “meme stocks” like AMC and Gametop became widely popular as a result of the Robinhood and Reddit-based pump and dump group r/wallstreetbets saga earlier this year.

Robinhood was the subject of controversy in January after the platform halted trading on GME amid the notorious short squeeze against hedge funds that was led by the fiery-eyed Reddit community r/wallstreetbets.

The group responded by immediately converging on crypto, with Dogecoin pumping by 980% on January 28 — the same day that Robinhood acted to dampen the frenzied meme stock speculation.

Robinhood has since estimated that Dogecoin accounted for 62% of its crypto revenues during Q2.

SEC charges Rivetz over $18M ICO, seeks the return of ‘ill-gotten gains’

September 10, 2021 Coin Telegraph

<div>SEC charges Rivetz over M ICO, seeks the return of 'ill-gotten gains'</div>

Coin Telegraph

The SEC alleged that some of the proceeds from the offering were used to give the founder a bonus of $1 million and a loan of $2.5 million which he used to purchase a house in the Cayman Islands.

The United States Securities and Exchange Commission (SEC) has charged Rivetz over an alleged illegal securities offering that fetched around $18 million.

Rivetz was founded in 2013 and the now-defunct blockchain hardware firm has been accused of generating $18 million via an unregistered securities offering between July and September of 2017 from more than 7,200 investors.

The SEC’s Sept. 8 complaint names defendants Rivetz Corp., founder Steven Sprague and the firm’s subsidiary Rivetz International. The ICO revolved around the RvT token, which the SEC states was promoted and sold as an investment opportunity and used to capitalize on Rivetz’s business in building an app, ecosystem and cyber security hardware.

The SEC asserts that the defendants touted the value of RvT tokens as “investments that purchasers could buy and sell on the secondary market” despite the product being “not-operational” at the time of offering:

“Token buyers could not purchase any goods and services using RvT tokens, and the tokens had no other use in any Rivetz product or service. In fact, several months after the tokens were distributed [...] Sprague stated on social media that Rivetz did not have ‘a specific release date’ for the Rivetz app through which consumers could use the RvT token."

Investors used Ether to purchase the RvT tokens. Following the initial sale, the SEC alleges that Rivetz and Sprague liquidated all of the Ether received via Rivetz International.

The complaint states the money was used to fund operations, give Spraque a $1 million bonus and a separate loan of $2.5 million which he used to “purchase a house in the Cayman Islands that he then leased back to Rivetz Int’l.”

If the defendants are found guilty the SEC is seeking injunctive relief, the return of what it calls “ill-gotten gains,” prejudgment interest and a civil penalty.

Is the SEC on the war path?

The SEC has been making headlines throughout September as the enforcement body takes action — or threatened to — against multiple crypto firms this month.

On Sept. 2 Cointelegraph reported that the SEC charged notorious Ponzi-scheme BitConnect as an alleged unregistered securities offering that netted $2 billion. Reports surfaced the enforcement body was also investigating decentralized exchange (DEX) Uniswap over its marketing and investor services.

Earlier this week Coinbase CEO Brian Armstrong revealed that the SEC was threatening to sue the firm if it launched a stablecoin yield program it deems as security.

The question shouldn't be, "is the yield product a security?"

The question is, "Why can't a reputable company offer a useful service to customers that want it, without getting sued by regulators in the god damned United States of America?"
— Erik Voorhees (@ErikVoorhees) September 9, 2021

SEC complaint