Coindeal founders face fresh fraud charges over $45M pilfered from investors

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The United States Securities and Exchange Commission has submitted a complaint against the founders and principal members of Coindeal for defrauding thousands of investors.

According to the U.S. District Court filing for the Eastern District of Michigan, five individuals and three corporate entities are facing fraud charges in connection to their role in the scheme. The charged individuals were Neil Chandran, Michael Glaspie, Linda Knott, Amy Mossel, and Garry Davidson. At the same time, the trio of BannersGo LLC, BannerCo-Op Inc, and AEO Publishing Inc were also named in the filing.

The SEC alleged that the five individuals attracted investors in Coindeal, their sham virtual currency project, by promising high returns on investments. The accused claimed their blockchain technology would be sold to wealthy investors for “trillions of dollars,” which would be shared among the early investors.

The SEC submitted that there was no sale of Coindeal to any investors. Instead, the principal members behind the scheme cornered nearly $45 million, which they allegedly splurged on purchasing luxury real estate and expensive vehicles.

“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors,” said the Director of the SEC’s Chicago Regional Office, Daniel Gregus.

The securities watchdog seeks to permanently bar the accused individuals from participating in the offer of virtual currencies or securities. The commission also wants “disgorgement plus pre-judgment interests” from the defendants while the corporate entities involved in the scheme face dire consequences stemming from their violations of the registration requirements of the Securities Act.

In 2022, the SEC secured the conviction of Chadran on wire fraud and the use of funds stemming from the Coindeal scheme.

New year, new energy

The SEC is choosing to put its best foot forward as the year opens, cracking down on the activities of bad actors in the space. The commission announced charges against the ex-CFO of a SPAC for embezzling over $5 million, which he used to trade in virtual currencies.

With two charges under its belt in 2023, it is expected that the commission will adopt a stricter stance against digital asset fraudsters than in 2022. SEC Chair Gary Gensler has hinted that the agency would continue to attempt to police the digital asset industry in the wake of high-profile failures like FTX.

An expansion of the SEC’s Crypto Assets and Cyber Unit by 20 persons and the designation of several digital assets as securities offer a glimpse of what is to come for the industry.

Watch: The BSV Global Blockchain Convention presentation, Trust But Verify: Everything