Douver Torres Braga, Joff Paradise, and Keleionalani Akana Taylor, Jonathan Tetreault

The Securities and Exchange Commission today announced charges against Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor, and Jonathan Tetreault for their roles in Trade Coin Club, a fraudulent crypto Ponzi scheme that raised more than 82,000 bitcoin, valued at $295 million at the time, from more than 100,000 investors worldwide.

According to the SEC's complaint, filed in the United States District Court for the Western District of Washington, Braga created and controlled Trade Coin Club, a multi-level marketing program that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot. The SEC alleges that Braga and Paradise lured investors with false representations that the bot made "millions of microtransactions" every second, and that investors would receive minimum returns of 0.35 percent daily. However, instead of deploying investor funds for the purported trading bot, Braga allegedly siphoned off investor funds for his own benefit and to pay a network of worldwide Trade Coin Club promoters, including Paradise, Taylor, and Tetreault.

The SEC further alleges that Trade Coin Club operated as a Ponzi scheme and that investor withdrawals came entirely from deposits made by investors, not from any crypto asset trading activity by a bot or otherwise. The complaint further alleges that Braga personally received at least 8,396 bitcoin of the amounts invested (worth $55 million at the time), Paradise received 238 bitcoin (worth more than $1.4 million at the time), Taylor received 735 bitcoin (worth more than $2.6 million at the time), and Tetreault received 158 bitcoin (worth more than $625,000 at the time).

The SEC's complaint alleges that Braga violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act; Paradise violated the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act, and the broker-dealer registration provisions of Section 15(a) of the Exchange Act; and Taylor violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act and the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The complaint seeks injunctive relief, disgorgement, and civil penalties. The SEC filed a second complaint alleging that Tetreault violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act and the broker-dealer registration provisions of Section 15(a) of the Exchange Act. Without admitting or denying the allegations, Tetreault agreed to settle the SEC's charges. The settlement is subject to Court approval.

The SEC's investigation was conducted by Serafima K. McTigue of the Crypto Assets and Cyber Unit and Victor Hong of the San Francisco Regional Office. The case was supervised by Steven Buchholz, David Hirsch, and Jorge G. Tenreiro of the Crypto Assets and Cyber Unit. The litigation is being conducted by John Han of the San Francisco Regional Office and Ms. McTigue. The Commission appreciates the assistance of Brazil's Comissƒ£o de Valores Mobilƒ¡rios, Portugal's Comissƒ£o do Mercado de Valores Mobiliƒ¡rios, the Finland Financial Supervision Authority, and the Korea Financial Services Commission.

The SEC's Office of Investor Education and Advocacy and Enforcement's Retail Strategy Task Force has issued an Investor Alert on Digital Asset and Crypto Investment and an Investor Alert on Pyramid Schemes Posing as Multi-Level Marketing Programs. Investors can find additional information about digital asset and crypto investment schemes, including the warning signs of fraud, at Investor.gov.

For more information on this topic:

Investor Alert: Watch Out for Fraudulent Digital Asset and "Crypto" Trading Websites

ICO - Howeycoins