FTX engineer charged by SEC
The Securities and Exchange Commission SEC) has charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd. (FTX), for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh along with Samuel Bankman-Fried and Gary Wang. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
According to the SEC’s complaint, Singh created software code that allowed FTX customer funds to be diverted to Alameda Research, a crypto hedge fund owned by Bankman-Fried and Wang, despite false assurances by Bankman-Fried to investors that FTX was a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and that Alameda was just another customer with no special privileges. The complaint alleges that Singh knew or should have known that such statements were false and misleading.
“We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “A pillar of our securities laws is that when companies and their representatives decide to speak on an issue, they can’t lie to investors on matters that are core to their investment decisions. That’s true when it comes to crypto asset securities, just as it is in connection with any other securities.”
In a parallel action, the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC) today announced charges against Singh.
Crypto Ponzi scheme charges in US
A federal grand jury in the District of Oregon has found guilty four founders of Forsage, a purportedly decentralized finance (DeFi) cryptocurrency investment platform, for their roles in a global Ponzi and pyramid scheme that raised approximately $340 million from victims.
According to court documents, Vladimir Okhotnikov, aka Lado; Olena Oblamska, aka Lola Ferrari; Mikhail Sergeev, aka Mike Mooney, aka Gleb, aka Gleb Million; and Sergey Maslakov, all Russian nationals, allegedly touted Forsage as a decentralized matrix project based on network marketing and “smart contracts,” which are self-executing contracts on the blockchain. The defendants aggressively promoted Forsage to the public through social media as a legitimate and lucrative business opportunity, but in reality, the defendants operated Forsage as a Ponzi and pyramid investment scheme that took in approximately $340 million from victim-investors around the world.
ASIC launches first ‘Greenwashing’ case
The Australian Securities & Investments Commission (ASIC) has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings against Mercer Superannuation (Australia) Limited (Mercer) for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
ASIC Deputy Chair Sarah Court said, ‘This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.’
ASIC alleges Mercer made statements on its website about seven ‘Sustainable Plus’ investment options offered by the Mercer Super Trust, of which Mercer is the trustee. However, ASIC alleges members who took up the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded. In doing so, ASIC alleges Mercer made false and misleading statements and engaged in conduct that could mislead the public.
A selected summary of key developments for regulated financial institutions
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