The US Securities and Exchange Commission charged three additional individuals for their roles in an alleged US$30 million initial coin offering fraud that involved a Cayman company.
In January 2020, the SEC charged Boaz Manor and his associate Edith Pardo, together with the companies CG Blockchain, Inc. and Cayman-based BCT Inc. SEZC.
The ongoing case alleges that Manor and Pardo hid Manor’s real identity with aliases and physical disguises to conceal his past as a convicted criminal. The SEC’s civil case against Manor and Pardo was halted in April 2020 pending the outcome of related criminal proceedings.
According to an SEC complaint filed in the US District Court in New Jersey on 15 June, the defendants, Canadian Ali Asif Hamid and Americans Michael Gietz and Cristine Page, were “knowing and substantial participants in the fraudulent scheme”.
The SEC alleges that all three defendants were part of Manor’s inner circle and had leadership roles in the fraudulent ICO that would purportedly fund the development of a blockchain-based alternative to the Bloomberg terminal to trade digital assets.
According to the SEC complaint, the three defendants knew that Manor was a convicted criminal at the centre of a widely publicised Canadian hedge fund collapse and actively concealed that he was behind the venture.
They allegedly did so by using Manor’s chosen alias ‘Shaun MacDonald’ during the ICO, including in interactions with ICO investors. They helped create and distribute misleading ICO marketing materials that omitted any reference either to Manor or to the fictional ‘MacDonald’ and instead touted a purported ‘executive team’ of individuals who, in reality, had no senior managerial authority over the business.
Hamid also helped deceive investors about Pardo’s role, helping misrepresent her as the sole financial backer and head of the business, the SEC complaint stated.
In addition, the token sale itself was not registered with the commission and constituted an illegal offer and sale of securities.
The SEC’s complaint charges Hamid, Gietz, and Page with violating, as well as aiding and abetting violations of, antifraud provisions of the federal securities laws and with violating securities registration requirements.
The complaint seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief.
Without admitting or denying the SEC’s allegations, Page has agreed to a settlement, subject to court approval, that includes permanent injunctions, disgorgement of the digital assets that she received in connection with her misconduct, and a civil penalty of $192,768.