SEC Files Charges Against Siblings for $60M Ponzi Scheme Involving Crypto Trading Bot

2 min read | August 27, 2024 01:05 AM PDT | By Team Kalkine Media

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SEC Files Charges Against Siblings for $60M Ponzi Scheme Involving Crypto Trading Bot — Image source: shutterstock

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The United States Securities and Exchange Commission (SEC) has filed charges against brothers Jonathan Adam and Tanner Adam, accusing them of operating a fraudulent $60 million cryptocurrency Ponzi scheme involving a non-existent trading bot. The complaint, filed on August 26 in the U.S. District Court for the Northern District of Georgia, Atlanta, alleges that the brothers deceived over 80 individuals by promoting a {Crypto} trading bot purportedly capable of generating 13.5% monthly returns.

According to the SEC, from January 2023 to June 2024, the Adams claimed their bot identified arbitrage opportunities across cryptocurrency platforms. They purported that their system could exploit minor price differences by simultaneously purchasing and selling assets. The funds were supposedly allocated to a lending pool used for flash loans and executing trades within the same blockchain transaction.

However, the SEC asserts that the trading bot was fabricated and did not exist. Instead, Jonathan and Tanner Adam allegedly diverted $53.9 million of the $61.5 million raised, using the funds to support a lavish lifestyle. This included the acquisition of vehicles and the construction of a multimillion-dollar condominium.

Justin Jeffries, Associate Director of Enforcement at the SEC’s Atlanta Regional Office, highlighted that the scheme was entirely fraudulent. The funds were reportedly used for Ponzi-like payments, designer goods, recreational vehicles, and high-value real estate. Additionally, Jonathan Adam allegedly misrepresented his background, failing to disclose prior convictions for securities fraud.

To halt the ongoing scheme, the SEC has secured emergency asset freezes against the Adams' companies, GCZ Global, LLC, and Triten Financial Group LLC. The SEC seeks permanent injunctions against these entities, the forfeiture of all funds obtained from the scheme, and civil penalties.

In June, blockchain intelligence firm TRM Labs reported that cryptocurrency pyramid and Ponzi schemes worldwide received a combined $7.8 billion in 2022.

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