In the US, federal agencies are suing two siblings for allegedly defrauding thousands of investors through a Ponzi scheme billed as a digital currency scheme and block reward mining venture. The two defrauded investors of $124 million while falsely claiming in roadshows and YouTube videos that they generated millions in mining and were backed by mega-corporations.
The United States Securities and Exchange Commission (SEC) announced its charges against John and JonAtina (Tina) Barksdale on March 8, accusing them of defrauding thousands of people through two fraudulent unregistered securities offerings involving Ormeus Corner.
In its charges, filed in court for the Southern District of New York, the watchdog claimed that the two siblings had defrauded investors since June 2017, selling their ERC-20 token on trading platforms. Additionally, they sold subscription packages that included the token along with an investment in a digital asset exchange program.
To attract investors, the two have relied on roadshows around the world and extensive use of social media, YouTube videos and blog posts. They claimed their business was backed by one of the largest mining operations in the world, despite their own mining business disappearing in 2019 after generating just $3 million.
They have always told investors that Ormeus Coin has a $250 million mining operation which produces revenue of $5.4-8 million per month.
To keep their Ponzi scheme a secret, the Barksdales included a digital wallet on their independent third-party public website that displayed a balance of over $190 million in digital assets as of November 2021. At the time, the actual project balance was less than $500,000.
Associate Director of the SEC’s Enforcement Division, Melissa Hodgman, described the two brothers as “modern-day snake oil salesmen” who relied on social media and touring to attract investors.
“We will continue to vigorously pursue individuals who sell securities in schemes to defraud the investing public, regardless of the label promoters apply to their products,” she added.
In an accompanying indictment, the Department of Justice (DoJ) charged John with one count of conspiracy to commit securities fraud, one count of conspiracy to commit fraud e-mail, securities fraud and wire fraud. All four counts carry a maximum of 65 years in prison.
“Along with our law enforcement partners here and abroad, we will work tirelessly to prosecute those who commit fraud against the public in the sale of cryptocurrencies,” the U.S. attorney said. Damian Williams, commenting on the indictment.
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