Recently, the U.S. Securities and Exchange Commission (SEC) filed a complaint against brothers Jonathan Adam and Tanner Adam for allegedly running a $60 million Ponzi scheme. The complaint was lodged in the United States District Court for the Northern District of Georgia, Atlanta, accusing the siblings of defrauding over 80 individuals. The brothers purportedly claimed to be operating a crypto bot that promised a monthly return of 13.5% to investors. They convinced these individuals by stating that the bot could identify arbitrage opportunities across various platforms, with investor funds supposedly being used for flash loans and trades on a blockchain.
According to Justin Jeffries, the Associate Director of Enforcement at the SEC’s Atlanta Regional Office, the alleged bot was completely fictitious. Instead of carrying out any trades, the brothers reportedly misappropriated a large portion of the raised funds for their personal use. They used the money to fund lavish lifestyles, including purchasing luxury vehicles, trucks, and even constructing a $30 million condominium. Despite reassurances from the brothers that the investment carried minimal risk, the SEC claims that they failed to disclose crucial information, such as Jonathan’s previous convictions for securities fraud.
In response to the alleged Ponzi scheme, the SEC obtained emergency asset freezes for the brothers’ companies, GCZ Global LLC and Triten Financial Group LLC. The regulatory body has charged both Jonathan and Tanner with violating federal securities laws’ anti-fraud provisions. The SEC is seeking permanent injunctions against their companies, the return of all investor funds, and civil penalties. Notably, Jonathan invoked the Fifth Amendment when subpoenaed for testimony, while Tanner chose not to produce any documents or cooperate with the agency’s investigation.
In recent years, the SEC has observed a decline in the amount of crypto directed to scam-related addresses. In 2023, there was an 11% decrease from the previous year, with $12.5 billion being funneled towards fraudulent schemes. Ponzi and pyramid schemes remain prevalent in the crypto space, with the SEC also recently charging NovaTech Ltd. and its principals for defrauding a large number of investors. The scheme promised profits from safe investments in crypto and foreign exchange markets, which ultimately failed to materialize.