fbpx

SEC freeze assets of two brothers’ in alleged crypto scheme

Chris Lee

SEC in move against two brothers’ crypto scheme

A leading US regulator has confirmed the filing of an emergency action against two brothers and a series of companies owned by them.

The Securities and Exchange Commission (SEC) made the move against two men from the state of Pennsylvania – Shane Hvizdzak and Sean Hvizdzak – plus three business entities that they run.

The regulator secured an emergency action as well a temporary restraining order over claims that they were offering a fraudulent cryptocurrency scheme.

Allegedly, the pair offered a securities fund that supposedly invested in digital assets.

However, according to the SEC, the pair in fact did not represent the performance of the fund correctly when appealing to traders.

They also made false financial statements and audit documents, the SEC claimed.

In a statement, the regulator shared the figures that it claims the pair misrepresented when marketing their scheme to potential investors.

“According to the SEC’s complaint, from at least July 2019 through May 2020, brothers Sean Hvizdzak and Shane Hvizdzak offered securities in a private fund that purported to invest in digital assets by misrepresenting fund performance, fabricating financial statements, and forging audit documents,” it said.

“For example, the complaint alleges that the Hvizdzaks misrepresented in marketing materials that the fund earned 100.77% and 92.90% on its investments during the third and fourth quarters of 2019, when in fact the fund actually lost money in those quarters.”

It also went on to claim that some of the cash invested in the fund found its way into the pockets of the two brothers.

“In addition, the SEC alleges that the brothers diverted tens of millions of dollars from the fund to personal accounts at banks and digital asset trading platforms, and then transferred the assets on multiple blockchains to themselves and others,” it added.

The complaint by the regulator was unsealed late last week in the US District Court for the Western District of Pennsylvania.

In addition to the accusations levelled at the two brothers, the entities – or companies – involved in the case are Hvizdzak Capital Management, LLC; High Street Capital, LLC; and High Street Capital Partners, LLC.

The move came after the court also took other steps to aid the case.

These include “an order prohibiting the destruction of documents,” the SEC said in its statement.

The next key stage is likely to be a hearing, which will occur on 30th June.

At this hearing, there is likely to be consideration of a continued asset freeze and potentially even the issuance of a preliminary injunction.

According to Adam S. Aderton, who serves as the co-chief of the SEC’s Asset Management Unit, the case could serve as a warning to future potential investors in schemes that claim on the face of it to have strong performance statistics.

“As alleged in our complaint, the Hvizdzaks touted exceptional, but false, performance to potential investors when offering their fund,” he was quoted as saying.

“Investors should be skeptical of claims that seem too good to be true,” he added.


Chris Lee

Latest news

British cryptocurrency trading platform shut down
A cryptocurrency trading platform that lied about its celebrity backers has been closed down by an arm of the British government. Read more
Assessing if an online broker might be fraudulent
  Introduction There is a myriad of online brokers, under different regulatory environments to choose from, and it is expected that they will represent your best interests as a fiduciary. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2012 Global CFD and FX broker
Number One Broker
Best FOREX BROKER Visit broker
5
#2 Forex Broker Pepperstone LogoYour capital is at risk Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
5
#3 Your capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
5
#4 Plus500 Logo80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008 Global CFD Broker
Number One Broker
Best Trading App Visit broker
5
#5 FxPro LogoYour capital is at risk Founded: 2006 CFD and Cryptocurrency Broker
Number One Broker
CFD and Cryptocurrency Visit broker
5

    Forex Fraud Certified Brokers

    VantageFX Small Logo
    Exness Small Logo
    Swissquote logo
    skilling logo
    City Index Logo
    LegacyFX Small Logo
    FXTM Logo
    XTB Logo
    OctaFX Logo
    Oinvest Small Logo
    Forex.com Logo
    Pepperstone
    iTrader Logo
    ATFX Logo
    IQ Option Logo
    Oanda Small Logo
    Plus500 Small Logo