The United States SEC filed to secure a court order freezing the three funds’ assets and halting their operations. Further, the court ordered an accounting, expedited discovery, as well as prohibiting the destruction of documents. The Securities Exchange Commission moved on Friday to freeze the assets of three Pennsylvania-based crypto funds that it claimed bilked investors out of “tens of millions of dollars. The SEC filed a complaint against brothers Sean Hvizdzak and Shane Hvizdzak, and their associated businesses, Hvizdzak Capital Management, High Street Capital, and High Street Capital Partners.
Crypto funds’ owners lied to investors.
The US SEC claimed the crypto funds’ owners had lied to investors and misappropriated funds. The SEC also filed to secure a court order freezing the three funds’ assets and halting their operations. The US court ordered an accounting, expedited discovery, as well as prohibiting the destruction of documents. According to the SEC complaint, the two brothers raised funds from investors by misrepresenting their business performance and regulatory status. Hvizdzaks also offered their clients fake financial statements and forged audit documents to lure investors.
The SEC alleged that crypto firms lied about profits to investors.
The complaint by the US SEC further alleged that the crypto company owners claimed in their marketing materials that the fund earned 100.77% and 92.90% during the third and fourth quarters of 2019 when in reality they lost money in those quarters. Some of the funds received from investors never went to crypto asset investment. The SEC alleged that the brothers diverted tens of millions of dollars from the fund to their personal accounts at banks and crypto exchanges. The US SEC has continued to crack down on crypto scams over the last few years. Since crypto industry rose to prominence over the past few years, many crypto funds have emerged to attempt to capitalize on the new interest in the space.