U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25729 / May 18, 2023
Securities and Exchange Commission v. Chicago Crypto Capital LLC, et al., No. 1:22-cv-04975 (N.D. Ill. filed Sept. 14, 2022)
SEC Obtains Default Judgments Against Unregistered Brokers for Conducting a Fraudulent and Unregistered Offering of Crypto Asset Securities
On May 10, 2023, the U.S. District Court for the Northern District of Illinois entered final judgments against Chicago Crypto Capital LLC ("CCC"), its owner, Brian Amoah, and former salesman Elbert "Al" Elliott, whom the SEC previously charged with violations of the federal securities laws.
According to the SEC's complaint, from August 2018 through November 2019, CCC, Amoah, and Elliott acted as unregistered brokers and conducted an unregistered offering of BXY tokens, illegally raising at least $1.5 million in proceeds from approximately 100 individuals, many of whom had no experience investing in crypto assets. The complaint alleged that each of the defendants made materially false and misleading statements in the offer, purchase, and/or sale of BXY tokens, including about the custody and delivery of BXY, the markup charged by CCC, the delivery of account statements, CCC's liquidation of an investor's BXY, their personal investments in BXY, and the financial and management problems occurring at BXY's issuer, Beaxy Digital Ltd., in late 2019. The complaint further alleged that some of these investors never received their BXY tokens, and all those who invested paid an undisclosed markup on their BXY tokens.
The judgments, entered on the basis of default, enjoin CCC, Amoah, and Elliott from violating Sections 5 and 17(a) of the Securities Act of 1933, and Sections 15(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgments also permanently enjoin CCC, Amoah, and Elliott from participating, directly or indirectly, including, but not limited to, through any entity they control, in any offering of crypto asset securities; provided, however, that such injunctions shall not prevent them from purchasing or selling any crypto asset security for their own personal accounts. In addition, Amoah is barred from acting as an officer or director of a public company. The judgments order Amoah and CCC to pay jointly and severally disgorgement of $935,599.65, plus prejudgment interest of $136,087.10; and Elliott to pay disgorgement of $21,777.64, plus prejudgment interest of $3,167.66. The judgments also impose civil penalties of $1,339,368 on CCC, $245,553 on Amoah, and $133,938 on Elliott.
The SEC's investigation was conducted by Peter Senechalle and Devlin N. Su, with assistance from Craig McShane, and was supervised by Amy Flaherty Hartman, of the SEC's Chicago Regional Office. Robert M. Moye and Messrs. Senechalle and Su led the litigation.