US regulator charges Latvian man involved in $7M ICO scams

The U.S. Securities and Exchange Commission (SEC) has filed charges against a Latvian man accused of orchestrating two digital currency scams. The first related to a digital currency debit card while the second was a fake block reward mining project token sale.

In a press release, the SEC revealed it had filed a civil complaint in the Eastern District of New York against Ivars Auzins. According to the regulator, Auzins allegedly defrauded hundreds of investors and took off with at least $7 million through two unregistered digital asset securities offerings. Auzins allegedly used fictitious entities, fake names, and fraudulent profiles to conduct his scams.

In the first scheme, which took place between January and March 2018, Auzins allegedly conducted an unregistered securities offering for a project known as Denaro. He claimed that it was a “multi-currency debit card platform.”

Auzins allegedly told investors that Denaro would allow users to securely store their digital assets on its wallet and then spend it like any other debit card. But as the SEC notes, “all of the claimed products or services being offered were fictitious, including the relationship with the credit card issuer.”

Denaro was one of many scams that have made off with millions of dollars in the past five years by purporting to offer a debit card that lets users spend their digital assets, authorities said. One of the more renowned ones is Centra Tech, a project whose founders have been held culpable for their crime, with one now serving eight years in prison. Centra Tech brought on music producer DJ Khaled and boxing legend Floyd Mayweather to promote it, and claimed to be working with Bancorp, Visa and Mastercard to issue Centra Cards. It turned out to be a $25 million scam that landed the two celebrities in trouble with the SEC.

In the second scam, Auzins allegedly sold tokens in an unregistered securities offering for Innovamine. He touted it as a cloud mining program that would have automatic daily payouts for its investors in whichever coin they mine.

In both ICOs, Auzins allegedly misappropriated the funds, with most of it going towards his personal expenses.

Auzins is charged with violating the antifraud and registration provisions of the federal securities laws. The securities regulator seeks permanent injunctions against Auzins, disgorgement plus prejudgment interest, civil penalties and an officer-and-director bar against him.

Kristina Littman, the head of the SEC’s Enforcement Division’s Cyber Unit, commented, “As we allege, Auzins was engaged in a brazen scheme to defraud retail investors under the guise of profitable digital asset opportunities. We will continue to detect and pursue those that seek to victimize investors in the digital asset space.”

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