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Cybersecurity Enforcement Actions

June 20, 2017

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Digital Currency/Initial Coin Offerings

Action Name Description Date Filed
Centra Tech., Inc. The Commission filed an amended complaint to the April 2, 2018, district court action against a third member of a purported financial services start-up, charging him with orchestrating a fraudulent ICO. 4/20/2018
SEC v. Longfin Corp., et al. The Commission filed a district court action and obtained an emergency asset freeze against Longfin Corp., its CEO and three of its affiliates, alleging that the company and its CEO engaged in an unregistered distribution of securities and the three affiliates sold unregistered securities after the company announced a related-party acquisition of a purported cryptocurrency website, causing a dramatic increase its stock price. 4/6/2018
Centra Tech., Inc. The Commission filed a district court action against two co-founders of a purported financial services start-up, charging them with orchestrating a fraudulent ICO. 4/2/2018
SEC v. Jon E. Montroll and Bitfunder The Commission filed a district court action against a former bitcoin-denominated platform and its operator for operating an unregistered securities exchange and defrauding users of that exchange. The SEC also charged the operator with making false and misleading statements in connection with an unregistered offering of securities. 2/21/2018
SEC v. AriseBank et al. The Commission filed a district court action and obtained an emergency asset freeze against an allegedly fraudulent ICO that claimed to run the world’s first “decentralized bank.” 1/25/2018
In re Munchee, Inc The Commission filed a settled cease and desist order against a California-based company selling digital tokens in an unregistered offering to investors to raise capital for its blockchain-based food review service. 12/11/2017
SEC v. PlexCorps et al. The Commission filed a district court action and obtained an emergency asset freeze against a recidivist Quebec securities law violator, Dominic Lacroix, and his company, PlexCorps. 12/1/2017
SEC v. REcoin Group Foundation, LLC et al. The Commission charged Maksim Zaslavskiy and his two companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds (Recoin Group Foundation and Diamond Reserve Club). 9/29/2017
Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO The Commission issued a Report of Investigation concerning the application of the U.S. federal securities laws to the offer and sale of DAO Tokens, which were virtual tokens created and distributed on a blockchain by an entity called “The DAO.” 7/25/2017
SEC v. Renwick Haddow, et al. The Commission filed a district court action and obtained an emergency asset freeze against Renwick Haddow, the founder of a purported Bitcoin holding-and-trading platform and a chain of co-working spaces, alleging that he defrauded investors in both companies while also hiding his connection given his past disciplinary history with U.K. regulators. 6/30/2017
In re Bitcoin Investment Trust and SecondMarket, Inc. The Commission filed a settled administrative proceeding against SecondMarket, Inc., a New York broker-dealer registered with the Commission, and Bitcoin Investment Trust (BIT), a Delaware trust whose sole assets are bitcoins. Each agreed to settle charges that they respectively violated Rules 101 and 102 of Regulation M under the Securities Exchange Act of 1934 in connection with their purchases of BIT shares during a continuous distribution. 7/11/2016
SEC v. Homero Joshua Garza, GAW Miners, LLC, et al. The Commission charged Garza and his two bitcoin mining companies with conducting a Ponzi scheme by offering shares – called “Hashlets” – in a bitcoin mining operation that did not have enough computing power for the mining they promised to conduct. 12/1/2015
In re Sand Hill Exchange et al. In June 2015, the SEC filed a settled administrative action against 2 entrepreneurs who offered and sold security-based swaps through a website called Sand Hill exchange and sought people to fund accounts at Sand Hill using dollars or bitcoins. 6/17/2015
In re BTC Trading, Corp. and Ethan Burnside The Commission brought a settled administrative proceeding against Burnside, a video game programmer and bitcoin hobbyist, for (a) operating two online venues for trading securities – BTC Virtual Stock Exchange and LTC-Global Virtual Stock Exchange – using bitcoin and litecoin without registering the sites as broker-dealers or stock exchanges, and (b) conducting two unregistered offerings, one in LTC-Global itself, and another in a litecoin mining venture he owned and operated. 12/8/2014
In re Erik T. Voorhees The Commission charged Voorhees, a Bitcoin entrepreneur with the offer and sale of unregistered securities in SatoshiDICE, a well-known bitcoin betting game, and FeedZeBirds, a social media marketing venture. 6/3/2014
SEC v. Trendon T. Shavers and Bitcoin Savings and Trust The Commission charged Shavers and his company with defrauding investors in a bitcoin-denominated Ponzi scheme, raising more than 700,000 bitcoins in principal investments from BTCST investors, and falsely promising of up to 7% weekly returns based on BTCST’s purported bitcoin market arbitrage activity. 7/23/2013

Account Intrusion

Action Name Description Date Filed
SEC v. Joseph P. Willner Day trader hacked into over 100 online customer brokerage accounts to manipulate the price of securities generating at least $700,000 in illicit profits 10/30/2017
SEC v. Mustapha, Idris Dayo Overseas trader hacked into online customer brokerage accounts to manipulate stock prices through unauthorized trades 6/22/2016
SEC v. Nagaicevs, Igors Overseas trader hacked into online customer brokerage accounts to manipulate stock prices through unauthorized trades 1/26/2012

Hacking/Insider Trading

Action Name Description Date Filed
SEC v. Hong, Iat, et al. Overseas traders hacked into two U.S. law firms to obtain nonpublic information on which they traded 12/27/2016
SEC v. Ly, Jonathan IT specialist hacked into the email accounts of senior executives of his employer to obtain nonpublic information on which he traded 12/5/2016
SEC v. Dubovoy, Arkadiy, et al. Overseas trading ring hacked into the servers of newswire services to obtain nonpublic information on which they traded 5/4/2016
SEC v. Zavodchiko, Evegenii, et al. Overseas trading ring hacked into the servers of newswire services to obtain nonpublic information on which they traded 2/18/2016

Market Manipulation

Action Name Description Date Filed
SEC v. Murray, Robert W U.S.-based trader filed false tender offer form on EDGAR to manipulate stock price 5/19/2017
SEC v. Aly, Nauman A. Overseas trader manipulated stock price by filing false Schedule 13D form on EDGAR 5/24/2016
SEC v. PTG Capital Partners LTD, et al. Overseas trader manipulated prices of stocks through false EDGAR filings 3/11/2016
SEC v. Craig, James Alan Overseas trader disseminated false tweets to manipulate stock prices 11/6/2015

Safeguarding Customer Information

Action Name Description Date Filed
Morgan Stanley Smith Barney LLC Failure to safeguard customer data in violation of Reg SP 6/8/2016
RT Jones Capital Equities Management, Inc. Failure to safeguard customer data from cyber-breaches in violation of Reg SP 9/22/2015

Trading Suspensions

Action Name Description Date Filed
HD View 360 Inc. The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information about the company, including certain statements regarding enhancing a subsidiary with blockchain technology. 3/1/2018
Cherubim Interests, Inc. The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information in the marketplace including in press releases issued. 2/16/2018
PDX Partners, Inc., The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information in the marketplace about, among other things, the nature of the company’s business operations and the value of its assets. 2/16/2018
Victura Construction Group, Inc., The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information in the marketplace about, among other things, the nature of the company’s business operations and the value of its assets, including in press releases issued. 2/16/2018
UBI Blockchain Internet, Ltd. The Commission suspended trading in this publicly-traded company because of (i) questions regarding the accuracy of assertions, since at least September 2017, by UBIA in filings with the Commission regarding the company’s business operations; and (ii) concerns about recent, unusual and unexplained market activity in the company’s Class A common stock since at least November 2017. 1/5/2018
The Crypto Co. The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information in the marketplace about, among other things, the compensation paid for promotion of the company, and statements in Commission filings about the plans of the company’s insiders to sell their shares of The Crypto Company’s common stock. 12/18/2017
In re Rocky Mountain Ayres, Inc. The Commission suspended trading in this publicly-traded company because of questions regarding by RMTN in a press release dated August 22, 2017, and in the “Project White Paper” documents, accessible through a link in the press release, concerning, among other things, the Kairos ETF. 9/15/2017
In re American Security Resources Corp. The Commission suspended trading in this publicly-traded company because of questions regarding information concerning the company’s transition to the cryptocurrency markets and early adoption of blockchain technology. 8/24/2017
In re First Bitcoin Capital Corp. The Commission suspended trading in this publicly-traded company because of concerns regarding the accuracy and adequacy of information about the company’s value of the company’s assets and capital structure. 8/23/2017
In re CIAO Group, Inc. The Commission suspended trading in this publicly-traded company because of questions regarding the accuracy of assertions concerning business plans in the telecommunications industry and plans for an ICO. 8/9/2017
In re Strategic Global Investments, Inc. The Commission suspended trading in the securities of this publicly-traded company because of questions regarding the accuracy of assertions by the company concerning ICOs. 8/3/2017
In re Sunshine Capital, Inc. The Commission suspended trading in the securities of this publicly-traded company because of questions regarding the accuracy of assertions by the company concerning the liquidity and value of the company’s assets, namely DIBCOINS, a cryptocurrency the company’s majority shareholder had created. 4/11/2017
In re Imogo Mobile Technologies Corp. The Commission suspended trading in the securities of this publicly-traded company amidst questions about its business which touted, among other things, the development and testing of a purportedly secure mobile Bitcoin platform. 2/19/2014

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