SEC Sues Chicago-Area Unregistered Crypto Assets Broker, Its Owner, and Two Salespeople with Fraud and with Conducting an Unregistered Offering
Litigation Release No. 25506 / September 14, 2022
Securities and Exchange Commission v. Chicago Crypto Capital LLC, et al., No. 1:22-cv-04975 (N.D. Ill. filed September 14, 2022)
The Securities and Exchange Commission charged Chicago Crypto Capital LLC ("CCC), its owner, Brian Amoah, and former salesmen Darcas Oliver Young and Elbert "Al" Elliott for allegedly defrauding investors during their unregistered offering of crypto asset securities.
According to the SEC's complaint, from approximately August 2018 through November 2019, CCC, Amoah, Young, and Elliott acted as unregistered broker-dealers 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 BXY offering was not registered with the Commission and did not satisfy any exemption from registration, and none of the defendants were registered with the Commission as brokers. In addition, the SEC alleges 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. As a result of this alleged fraud, the SEC alleges that some of these investors never received their BXY tokens, and all those who invested paid an undisclosed markup on their BXY tokens.
The SEC's complaint, filed in the U.S. District Court for the Northern District of Illinois, charges CCC, Amoah, Young, and Elliott with violating Sections 5(a) and (c) of the Securities Act of 1933 (the "Securities Act"), Section 15(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks injunctive relief, disgorgement with pre-judgment interest, and civil penalties. The SEC has accepted an offer of settlement from Young, in which he consented to the payment of disgorgement and a civil penalty, an associational bar, and injunctive relief.
The SEC's investigation was conducted by Peter Senechalle of the Crypto Assets and Cyber Unit and Devlin Su in the Chicago Regional Office, and supervised by Amy Flaherty Hartman and Carolyn Welshhans. The SEC's litigation is being led by Robert M. Moye.