Five Charged in $2 Billion Unregistered Crypto Offering

The US Securities and Exchange Commission (SEC) has charged five people with allegedly promoting an unregistered digital asset securities offering that raised more than $2 billion from retail investors.

According to the SEC’s complaint, which was filed in the US District Court for the Southern District of New York, Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble marketed and sold securities without registering the securities offering with the regulator, and without being SEC-registered as broker/dealers (B/Ds) as required by the federal law.

They are also accused of advertising the merits of investing in now-defunct cryptocurrency platform BitConnect’s lending program to prospective investors, including by creating “testimonial” style videos and publishing them frequently on YouTube. The promoters allegedly received commissions based on their success in soliciting investor funds.

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Joshua Jeppesen was also named as a defendant for being a liaison between BitConnect and the promoters, and represented the crypto platform at conferences and promotional events.

“We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors,” Lara Shalov Mehraban, associate regional director of SEC’s New York regional office, said in a statement. “We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets.”

According to the complaint, BitConnect told investors it would use investor funds to trade in and profit from the volatility of Bitcoin, and it promised to pay investors the resulting profits, which it claimed could be as high as 40% per month “with no risk.” The complaint also said BitConnect’s website included a chart showing historical returns of up to 2% daily, with no negative returns for any day.

Brown, Grant, Maasen, and Noble, who were among BitConnect’s most successful promoters in the US, were awarded an additional sales commission known as “development funds,” which were paid weekly and were calculated as a certain percentage of new loans made during that week by certain investors. According to the SEC, Brown received at least $480,000, Grant more than $1.3 million, Maasen over $475,000, and Noble over $730,000 as “referral commissions” and “development funds.” And for allegedly aiding and abetting BitConnect’s unregistered offers and sales of its lending program investments, Jeppesen received more than $2.6 million.

The SEC charged the promoters with violating the registration provisions of the federal securities laws. It charged Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities. The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.

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Tags: BitConnect, Craig Grant, Cryptocurrency, digital asset, Michael Noble, Ryan Maasen, SEC, Securities and Exchange Commission, Trevon Brown, Trevon James, unregistered offering

Dominic Garcia

CBRE Global Investors has tapped Dominic Garcia to the newly created position of chief pension investment strategist. Garcia joins the real asset investment manager from the Public Employees Retirement Association of New Mexico (PERA), where he worked for eight years—the last four as its chief investment officer.

At PERA, Garcia worked with stakeholders on enhancing the sustainability of the plan. He also established a risk budget, delegated investment authority to staff members, and created a risk-based approach to portfolio management.

Before joining the New Mexico PERA, Garcia was a senior funds alpha manager at the $144 billion State of Wisconsin Investment Board (SWIB), where he managed and oversaw the public market external active risk profile for global equities, global fixed income, multi-asset, and hedge funds, and was on the investment committee. At SWIB, Garcia worked under his mentor, CIO David Villa, who died in February.

Garcia’s new role will focus on developing solutions for pension funds that want to expand their infrastructure investments. A flood of money is expected to come into infrastructure projects over the coming years as President Joe Biden tries to pass an infrastructure plan that will invest an estimated $2 trillion this decade.

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“Pension funds are increasingly interested in infrastructure due to the predictability of cashflows and non-cyclical characteristics of the assets,” Stephen Dowd, CIO of private infrastructure strategies for CBRE Global Investors, said in a statement. “This new role underscores the strategic importance of infrastructure to our investors’ portfolios and our platform. We are excited to leverage Dominic’s investment expertise to help deliver these solutions to our investors.”

Garcia was named to CIO magazine’s 2021 Power 100 list earlier this year. He and his executive team were recognized for collaborating with stakeholders to improve long-term pension sustainability by modernizing investment governance and enacting pension reform. Garcia also integrated a risk-based approach that separates alpha and beta in the multi-asset investment portfolio.