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Cyber Enforcement Actions

June 20, 2017

Cybersecurity graphic

Digital Assets/Initial Coin Offerings

Action Name Description Date Filed
SEC v. Telegram Group Inc., et al. The Commission filed an emergency action and obtained a temporary restraining order against two offshore entities conducting an alleged unregistered, ongoing digital token offering in the U.S. and overseas that has raised more than $1.7 billion of investor funds.  10/11/2019
Block.one The Commission filed a settled cease-and-desist proceeding against a blockchain technology company for conducting an unregistered initial coin offering of digital tokens that raised the equivalent of several billion dollars over approximately one year.  9/30/2019
SEC v. Lucas The Commission filed a complaint against Jonathan C. Lucas, the former founder and chief executive officer of Fantasy Market, a purported online adult entertainment marketplace, for allegedly orchestrating a fraudulent initial coin offering.  9/20/2019
SEC v. ICOBox, et al. The Commission filed a complaint against ICOBox and its founder Nikolay Evdokimov alleging that they conducted an illegal $14 million securities offering of ICOBox’s digital tokens and acted as unregistered brokers for other digital asset offerings.  9/18/2019
SEC v. Bitqyck, Inc., et al. The Commission filed a settled district court action against an entity and two individuals that violated the registration and anti-fraud provisions of the Securities and Exchange Acts by offering and selling two unregistered digital asset securities, and the entity violated Section 5 of the Exchange Act by operating an unregistered national securities exchange, which the individuals aided and abetted.  8/29/2019
ICO Rating The Commission filed a settled cease-and-desist proceeding against Russian entity ICO Rating for violating Section 17(b) of the Securities Act by failing to disclose payments received from issuers for publicizing their digital asset securities offerings.  8/20/2019
SimplyVital Health, Inc. The Commission filed a settled cease-and-desist proceeding against a New England-based blockchain company for offering and selling approximately $6.3 million of securities to the public in unregistered transactions.  8/12/2019
SEC v. Middleton, et al. The Commission obtained an emergency asset freeze against Veritaseum, Inc., Veritaseum, LLC and Reginald ("Reggie") Middleton, alleging that the defendants violated the antifraud provisions and engaged in an unregistered offering of digital securities. 

8/12/2019

SEC v. Longfin Corp., et al. The Commission filed an additional action against Longfin Corp. and its CEO asserting fraud claims for allegedly falsifying the company's revenue and, together with a former Longfin consultant, for fraudulently securing the company's listing on Nasdaq. 

6/5/2019

SEC v. Kik Interactive Inc. The Commission filed a complaint against an ICO issuer for raising $100 million in an alleged unregistered securities offering that did not qualify for an exemption.  6/4/2019
SEC v. Pacheco The Commission filed a litigated district court action against the operator of an alleged $26.5 million pyramid scheme that enticed investors with points that were convertible into a cryptocurrency.  5/22/2019
NextBlock Global Ltd. and Alex Tapscott The Commission filed settled cease-and-desist proceedings against a Canadian corporation and its co-founder and former CEO for allegedly making misrepresentations in connection with a securities offering that raised $16 million to invest in blockchain companies and digital assets.  5/14/2019
SEC v. Natural Diamonds Investment Co., et al. The Commission obtained an emergency court order halting an alleged ongoing $30 million Ponzi scheme targeting more than 300 investors in the U.S. and Canada. Argyle Coin, LLC, a purported cryptocurrency business, and its principal lured investors by falsely claiming an investment in Argyle Coin was risk-free because it was backed by fancy colored diamonds, and promising to use investor funds to develop the cryptocurrency business.  5/13/2019
Mutual Coin Fund LLC and Usman Majeed The Commission filed settled cease-and-desist proceedings against a Michigan-based hedge fund manager and its principal for making misrepresentations and engaging in the unregistered, non-exempt sale of limited partnership interests in a fund it managed that invested in digital assets.  4/1/2019
Gladius Network LLC The Commission filed a settled cease-and-desist proceeding against a Washington, D.C.-based company that raised $12.7 million in an unregistered, non-exempt ICO and then self-reported to the Commission.  2/20/2019
CoinAlpha Advisors LLC The Commission filed settled cease-and-desist proceedings against a California-based hedge fund manager for engaging in the unregistered, non-exempt sale of limited partnership interests in a fund it managed that invested in digital assets.  12/7/2018
Floyd Mayweather, Jr. The Commission filed settled cease-and-desist proceedings against a celebrity who promoted ICOs on social media without disclosing the fact and amount of compensation he received from the issuers for the promotions. 11/29/2018
Khaled Khaled ("DJ Khaled") The Commission filed settled cease-and-desist proceedings against a celebrity who promoted an ICO on social media without disclosing the fact and amount of compensation he received from the issuer for the promotions. 11/29/2018
Paragon Coin, Inc. The Commission filed a settled cease-and-desist proceeding against an online company, Paragon Coin, in connection with its unregistered offering of tokens in an ICO that raised approximately $12 million to implement blockchain technology in the cannabis industry.  The Commission concluded that the PRG tokens were securities, and that the offering did not qualify from any exemption from registration. 11/16/2018
CarrierEQ, Inc., d/b/a Airfox The Commission filed a settled cease-and-desist proceeding against a Boston-based start-up, Airfox, in connection with its unregistered offering of tokens in an ICO that raised approximately $15 million to develop a token-denominated “ecosystem.”  The Commission concluded that the AIR tokens were securities, and that the offering did not qualify from any exemption from registration.   11/16/2018
Zachary Coburn The Commission filed a settled cease-and-desist proceeding against the founder of a digital asset trading platform for secondary market trading of ERC20 tokens, EtherDelta, for causing the trading platform to operate as an unregistered national securities exchange. 11/8/2018
SEC v. Blockvest LLC, et al. The Commission obtained an emergency court order halting a planned ICO and ongoing pre-ICO sales. The Commission alleged that Blockvest and its founder falsely claimed they received regulatory approval from various agencies (including the SEC) for the ICO, used the SEC seal without permission and a made-up regulatory agency to promote the ICO, and falsely claimed that Blockvest would be the first “licensed and regulated” cryptocurrency fund. 10/11/2018
SEC v. 1pool Ltd. a.k.a. 1Broker, et al. The Commission charged 1Broker and its CEO with registration violations in connection with their overseas trading platform that exclusively used bitcoins and offered and sold to U.S. residents Contracts for Difference that track U.S.-listed securities and are security-based swaps. The Commission also alleged that 1Broker and its CEO failed to register the offer and sale of the products, failed to transact these products on a registered national exchange, performed no know-your-customer (KYC) inquiries, and acted as an unregistered dealer. 9/27/2018
TokenLot LLC, Lenny Kugel, and Eli Lewitt The Commission filed settled administrative proceedings against a Michigan-based company and self-described “ICO Superstore” and its two owners for operating as unregistered broker-dealers in digital tokens sold in connection with ICOs and secondary market activities. 9/11/2018
Crypto Asset Management, LP and Timothy Enneking The Commission filed settled administrative proceedings against a California-based hedge fund manager and its sole principal for offering a fund formed to invest in digital assets that operated as an unregistered investment company while falsely marketing it as the "first regulated crypto asset fund in the United States." 9/11/2018
Tomahawk Exploration LLC and David T. Laurance The Commission obtained officer-and-director and penny stock bars in a settlement with the founder of a company responsible for a fraudulent ICO to fund oil exploration and drilling. 8/14/2018
SEC v. Jesky, et al. The Commission filed a settled district court action against two individuals who illegally sold restricted shares in UBI Blockchain Internet Ltd. at high market prices instead of the fixed price under a registration statement. The Commission previously suspended trading in the stock. The two individuals agreed to return approximately $1.4 million in ill-gotten gains and more than $188,000 in penalties. 7/2/2018
SEC v. Titanium Blockchain Infrastructure Services Inc., et al. The Commission obtained a court order halting an alleged ongoing fraud involving an ICO. The court also approved an emergency asset freeze and the appointment of a receiver. 5/22/2018
SEC v. Sharma, et al. The Commission filed an amended complaint to the April 2, 2018, district court action against a third member of Centra Tech, Inc., 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
SEC v. Sharma, et al. The Commission filed a district court action against two co-founders of Centra Tech, Inc., a purported financial services start-up, charging them with orchestrating an allegedly fraudulent ICO. 4/2/2018
SEC v. Montroll, et al. The Commission filed a district court action against a former bitcoin-denominated platform and its operator for allegedly operating an unregistered securities exchange and defrauding users of that exchange. The SEC also charged the operator with making alleged false and misleading statements in connection with an unregistered offering of securities. 2/21/2018

SEC v. AriseBank, et al.

Jared Rice Sr. and Stanley Ford

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.”  The Commission later settled with two former executives behind the allegedly fraudulent ICO in December 2018.

1/25/2018

12/11/2018

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 for allegedly 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. Garza, et al. The Commission charged Garza and his two bitcoin mining companies with conducting an alleged 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. Shavers 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 Intrusions

Action Name Description Date Filed
SEC v. Willner Day trader allegedly 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 Overseas trader allegedly hacked into online customer brokerage accounts to manipulate stock prices through unauthorized trades 6/22/2016
SEC v. Murmylyuk Trader allegedly hacked into online customer brokerage accounts to manipulate stock prices through unauthorized options trades 4/17/2012
SEC v. Nagaicevs Overseas allegedly 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. Ieremenko, et al. The Commission filed a district court action alleging that Ieremenko, working with others, hacked into the SEC's EDGAR system and extracted test files containing nonpublic information about upcoming quarterly earnings announcement to use for illegal trading. 1/15/2019
SEC v. Hong, et al. Overseas traders allegedly hacked into two U.S. law firms to obtain nonpublic information on which they traded 12/27/2016
SEC v. Ly IT specialist allegedly hacked into the email accounts of senior executives of his employer to obtain nonpublic information on which he traded 12/5/2016
SEC v. Zavodchiko, et al. Overseas trading ring allegedly hacked into the servers of newswire services to obtain nonpublic information on which they traded 2/18/2016
SEC v. Dubovoy, et al. Overseas trading ring allegedly hacked into the servers of newswire services to obtain nonpublic information on which they traded 8/11/2015

Market Manipulation

Action Name Description Date Filed
SEC v. Burns U.S.-based trader allegedly filed false tender offer form on EDGAR to manipulate stock price 7/11/2018
SEC v. Murray U.S.-based trader allegedly filed false tender offer form on EDGAR to manipulate stock price 5/19/2017
SEC v. Aly Overseas trader allegedly manipulated stock price by filing false Schedule 13D form on EDGAR 5/24/2016
SEC v. Craig Overseas trader allegedly disseminated false tweets to manipulate stock prices 11/6/2015
SEC v. PTG Capital Partners LTD, et al. Overseas trader allegedly manipulated prices of stocks through false EDGAR filings 6/4/2015

Regulated Entities – Cybersecurity Controls and Safeguarding Customer Information

Action Name Description Date Filed
Virtu Americas LLC (f/k/a KCG Americas LLC) The Commission filed a settled cease-and-desist proceeding against Virtu Americas LLC (f/k/a KCG Americas LLC) for failing to comply with certain provisions of Regulation SCI in connection with the dark pool formerly known as KCG MatchIt. 9/30/2019
The Options Clearing Corporation The Commission filed a settled cease-and-desist and administrative proceeding against a registered clearing agency for violating Exchange Act Rules 17Ad-22(b)(2) and (e)(1), (3), (4), (6) and (7), Reg. SCI, and Section 19(b)(1) of the Exchange Act and Rule 19b-4(c) thereunder as a result of its failures to establish and enforce policies and procedures involving financial risk management, operational requirements and information-systems security and changing of policies on core risk management issues without obtaining the required SEC approval. 9/4/2019
Voya Financial Advisors The Commission filed settled administrative proceedings against an Iowa-based broker-dealer and investment adviser related to its failures in cybersecurity policies and procedures surrounding a cyber intrusion that compromised personal information of thousands of its customers, in violation of Reg S-P and Reg S-ID. 9/26/2018
Morgan Stanley Smith Barney LLC Failure to safeguard customer data from cyber-breaches in violation of Reg S-P stemming from a Morgan Stanley employee transferring confidential customer data to a personal server that was eventually hacked. 6/8/2016
RT Jones Capital Equities Management, Inc. Failure to safeguard customer data from cyber-breaches in violation of Reg S-P as a result of an investment adviser's storage of sensitive customer information on a third-party hosted web server that was eventually hacked and its failure to adopt written policies and procedures reasonably designed to safeguard such customer information.  9/22/2015

Public Company Disclosure and Controls

Action Name Description Date Filed
Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Certain Cyber-Related Frauds Perpetrated Against Public Companies and Related Internal Accounting Controls Requirements The Commission issued a Report of Investigation regarding certain cyber-related frauds and public company issuer internal accounting controls requirements.  The Report discusses a type of cyber-fraud -- called "business email compromise" -- where perpetrators pretended in emails to be high-level company executives or vendors, and then convinced company personnel to transmit large wire transfers to accounts controlled by the perpetrators.  The Report explains that public companies should consider cyber threats when implementing internal accounting controls.  10/16/2018
Altaba Inc., f/d/b/a Yahoo! Inc. Failure to disclose December 2014 data breach in which Russian hackers stole personal data related to more than 500 million Yahoo! user accounts; the data breach was not disclosed until September 2016.   4/24/2018

Trading Suspensions

Action Name Description Date Filed
Bitcoin Generation, Inc. The Commission suspended trading in the securities of BTGN, inter alia, because of concerns about the accuracy and adequacy of information contained in BTGN’s public statements and because of stock promotional activity relating to BTGN and the market impact of such promotional activity. 4/29/2019
American Retail Group, Inc. aka Simex, Inc. The Commission suspended trading in the securities of ARGB amid questions surrounding statements claiming that the company had partnered with an SEC-qualified custodian for use with cryptocurrency transactions and that the company was conducting a token offering that was “officially registered in accordance [with] SEC requirements.” 10/22/2018
Bitcoin Tracker One and Ether Tracker One The Commission suspended trading in the securities of CXBTF and CETHF because of confusion among market participants regarding the true nature of these instruments. 9/9/2018
Evolution Blockchain Group Inc. The Commission suspended trading in Evolution Blockchain Group Inc. because of questions about the accuracy of information contained in a press release and concerns about recent unusual and unexplained market activity in the company’s common stock. 6/25/2018
IBITX Software Inc. The Commission suspended trading in IBITX because of questions about the accuracy of assertions concerning the company’s development of alternative forms of currency and its operation of a cryptocurrency platform. 4/20/2018
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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