The Securities and Exchange Commission (SEC) of the United States has charged two businesses, their executives, and a purported international gold trader with operating a hoax to increase interest in their digital currency.
According to the agency, the defendants received over $36 million as a result of the token’s misleading advertising.
An alleged pump and dump scheme involving the cryptocurrency Dignity (DIG) was allegedly run from 2017 to 2019 by the Bermudan company Arbitrade, the Canadian business Cryptobontix, Troy Hogg, owner and founder of Cryptobontix, James Goldberg, Stephen Braveman, COO of Arbitrade, and Max Barber, a purported international gold trader, according to a lawsuit filed on September 30, 2022.
According to the SEC’s complaint, in order to produce Dignity, an Ethereum-based token that was owned and managed by Hogg and Cryptobontix, the company hired Russian coders in 2017. The coin began “trading solely” on the Livecoin exchange in Russia.
Both Arbitrade and Cryptobontix asserted through announcements that the former acquired gold bullion from SION, a business owned by Barber, valued at $10 billion, and received it, with each of the three billion DIG tokens representing $1 in gold.
In order to increase investor confidence, the firms also stated that they hired an auditing company to examine the gold. The SEC, however, claimed that the gold audit and purchase never took place because they were ploys to entice investors to buy the DIG.
The SEC further asserted that Hog and Goldberg made $36.8 million in profits by selling DIG on Livecoin at “artificially inflated prices.”
It’s interesting to note that as of February 2020, DIG was removed from the Livecoin platform after the token’s value dwindled to zero.
According to the lawsuit, investors used bitcoin or another cryptocurrency to commit their assets to what they thought was an investment opportunity.
As a result, the SEC has accused the case’s defendants of “violating the antifraud and securities registration sections of the federal securities laws.”
Additionally, prejudgment interest, repayment of ill-gotten earnings, permanent injunctive relief, and civil monetary penalties are demanded in the regulator’s lawsuit.
The SEC also requests that the court impose an officer and director bar on each and every defendant in the complaint.