Seems less related to crypto and more related to good old scamming. The only thing crypto is the company pitch which is not where the SEC had a problem.
Right, for those that didn't read closely the only thing this appears to have to do with Bitcoin is that the scammer used the word "Bitcoin" in the names of one of the fraudulent investments he was pitching to people. He wasn't actually using Bitcoin or any other crypto currency in his scheme. He was using traditional banks.
The SEC themselves chose the subtitle of "SEC Files Fraud Charges in Bitcoin and Office Space Investment Schemes". Prosecution can be a very political process as prosecutors often have political ambitions and want to be seen in the press. My takeaway from this press release is that at least one prosecution desk within the SEC has refocused on crypto as a means to do that.
I had to go through all the SEC filings for the past few years recently and I really didn't see a lot about cryptocurrencies. I saw a lot about insider trading and outright fraud, and very few cases which were borderline. In fact, all the charges were so obvious that I looked up to see if anyone academic had made an estimate about what percent of cases the SEC actually goes forwards with, and it's probably less than 1%.
> offering materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist
That's a pretty big deal. That implies this is a fly-by-night operation where you give the appearance of being a business, then run off with the money. You can't just make up people involved in your company.
> The materials also misrepresented other key facts about both companies' operations.
When I wrote my paper on NJ's underfunded state pensions, they used similar language to describe what turned out to be "pulled millions of dollars out of thin air every year and told bond investors that imaginary money was put into the pension."
> Haddow allegedly diverted more than 80 percent of the in funds raised by the broker-dealer for the Bitcoin Store
Read: embezzlement
> and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco.
Read: tax evasion.
> had generated several million dollars in gross sales
So they basically presented made-up financial statements or at least stats you would get from it and gave that to investors.
> sold leases for more workspaces than actually existed
Come on, they're not even trying.
> [claimed] within months of opening and that Bar Works had engaged an auditor
The whole point of an auditor is that they verify claims like these. If the SEC let people falsely claim they've been audited, there'd be no point in having auditors in the first place. Auditors do the vast majority of the work that the SEC doesn't do. The SEC doesn't individually verify that each corporation has and is worth what they say they are, auditors do that.
