The Securities and Exchange Commission (SEC) has filed charges against brothers Jonathan and Tanner Adam, along with their respective companies, for allegedly operating a $60 million Ponzi scheme that affected over 80 investors nationwide.
What Happened: According to the SEC’s complaint filed on Aug. 26 in the United States District Court for the Northern District of Georgia, the Adam brothers, residents of Angleton, Texas, and Miami, Florida, respectively, are accused of fraudulently soliciting investors from January 2023 to June 2024.
The brothers allegedly promised returns of up to 13.5 percent monthly through a cryptocurrency arbitrage trading scheme.
The SEC alleges that Jonathan Adam falsely claimed to have created a “bot” for identifying arbitrage opportunities on a crypto asset trading platform.
Investors were told their funds would be used in a lending pool to finance “flash loans” for these trades through smart contracts. The brothers reportedly assured investors that their funds were safe barring a global market meltdown.
However, the SEC contends that no such lending pool existed. Instead, the complaint alleges that millions of dollars of investor funds were used to pay returns to existing investors and to support the brothers’ lavish lifestyles.
Tanner Adam is accused of using investor money for payments on a $30 million Miami condominium, while Jonathan Adam allegedly spent at least $480,000 on various vehicles.
The complaint further alleges that Jonathan Adam misrepresented his background to gain investor trust, failing to disclose previous convictions on three counts of securities fraud.
The SEC has obtained emergency asset freezes against the brothers and their companies, GCZ Global LLC and Triten Financial Group LLC.
The commission is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
What’s Next: The developments in this case and others like it are expected to be significant topics of discussion at Benzinga's Future of Digital Assets event on Nov. 19, where industry experts will explore the intersection of technology and investor protection.
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