SEC files charges in a $7 million digital asset fraud case

A Latvian man was charged with defrauding hundreds of retail investors out of $7 million through two separate fraudulent digital asset securities offerings, the Securities and Exchange Commission has revealed.

The SEC filed a civil complaint in the US District Court for the Eastern District of New York against Ivars Auzins. In its complaint, the regulator alleges that he defrauded US and foreign investors through the unregistered offer and sale of digital asset securities in an initial coin offering and a purported digital asset cloud mining program. According to SEC, Auzins used fake names, entities and profiles in his schemes, and misappropriated nearly all of the investor funds.

The US financial watchdog alleges that between January 2018 and March 2018, Auzins offered and sold unregistered digital tokens as part of an ICO of Denaro, a so-called “multi-currency debit card platform.” According to SEC’s complaint, Auzins made falsely claims that Denaro enabled users to store their digital assets in a secure digital wallet and then spend them “like any other debit card. In reality, all of the claimed products or services being offered were fictitious. In the end, Auzins, allegedly misappropriated all of the ICO’s proceeds.

SEC fraud

According to SEC, Auzins carried out a second scheme, where from April 2019 to July 2019 he fraudulently offered the unregistered securities of Innovamine, which supposedly provides cloud mining program. SEC stated that “Auzins claimed that investors could contribute digital assets to Innovamine, and then the company would perform mining activities and provide investors with a daily “automatic payout . . . in whichever coin they mine.” SEC’s complaint alleges that Auzins misappropriated nearly all of the funds raised in the offering.

Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, said:

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.

SEC charged Auzins with violating the antifraud and registration provisions of the federal securities laws. The Commission seeks permanent injunctions, disgorgement plus prejudgment interest, civil penalties, and bans against him.

Last month, the SEC charged Ryan Ginster with conducting two unregistered and fraudulent securities offerings. Through this scheme, he raised more than $3.6 million in cryptocurrency from retail investors.

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