Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, and Nam Tran
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26155 / October 15, 2024
Securities and Exchange Commission v. Russell Armand, Maxwell Hernandez, Manpreet Singh Kohli, and Nam Tran, No. 1:24-cv-12586-AK (D. Mass. filed Oct. 9, 2024)
SEC Charges Four Promoters in Crackdown on Manipulation of Crypto Assets Offered and Sold as Securities
The Securities and Exchange Commission announced fraud charges against four individuals for engaging in schemes to manipulate the markets for two crypto assets, “Saitama Inu” and “SaitaRealty,” being offered and sold as securities to retail investors. As alleged, the schemes were intended to induce investor victims to purchase the crypto assets by creating the false appearance of an active trading market for them.
According to the SEC’s complaint, crypto asset promoters Russell Armand, a resident of Texas, Maxwell Hernandez, a resident of Massachusetts, Manpreet Singh Kohli, a resident of India and England, and Nam Tran, an apparent resident of Washington, through the “Saitama” website, whitepaper, and social media statements, allegedly made public misrepresentations about their team’s development of a “Saitama ecosystem” of multiple products (including smart wallet applications and trading platforms) to artificially increase the value of the Saitama Inu crypto asset. The defendants also made allegedly false statements about buying or holding Saitama Inu while surreptitiously selling substantial amounts of the crypto asset. The defendants also allegedly engaged in market manipulation themselves and hired so-called market makers ZM Quant Investment Ltd. and Gotbit Consulting LLC to provide market-manipulation-as-a-service, which included generating artificial trading volume or manipulating the price of the Saitama Inu and SaitaRealty crypto assets that were offered and sold as securities to retail investors in unregistered transactions.
The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, alleges that all defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus pre-judgment interest, civil penalties, and officer-and-director bars against all the defendants. Armand and Hernandez consented to bifurcated settlements, subject to court approval, permanently enjoining them from violating the charged provisions of the federal securities laws, subjecting them to conduct-based injunctions, and barring them from acting as officers or directors. The court will determine the amount of disgorgement and prejudgment interest and any civil penalties.
The SEC appreciates the assistance of the FBI and the United States Attorney’s Office for the District of Massachusetts, which has announced parallel criminal actions.
The SEC’s investigation was conducted by David D’Addio, Amy Harman Burkart, Ivan Panchenko, Jeffrey Cook, and John McCann in the SEC’s Boston Regional Office, as well as Colin Missett and Joy Guo of the Crypto Asset and Cyber Unit (CACU). They were supervised by Amy Gwiazda, Michael Brennan, Donald Battle, and Jorge Tenreiro of CACU and by Celia Moore and John T. Dugan of the Boston Regional Office. The team also thanks the staff of the SEC’s Office of Strategic Hub for Innovation and Financial Technology for their assistance. The litigation will be led by Mr. D’Addio and Ms. Burkart.