SEC Files Emergency Action Against Miami-Based BKCoin and Principal for $100 Million Crypto Fraud Scheme

Miami-based investment adviser BKCoin Management LLC and one of its principals, Kevin Kang, are facing emergency action from the Securities and Exchange Commission (SEC) for their alleged involvement in a $100 million crypto fraud scheme.

According to the SEC on March 6, BKCoin raised money from at least 55 investors from October 2018 to September 2022, promising to use the funds to trade crypto assets and generate returns for investors through separately managed accounts and five private funds. However, the SEC alleges that BKCoin and Kang used some of the funds to make Ponzi-like payments and for personal use.

The SEC obtained an asset freeze, appointment of a receiver, and other emergency relief against BKCoin and Kang. The SEC also sought disgorgement, prejudgment interest, and a civil penalty from both defendants, as well as permanent injunctions against them. The SEC named each of the funds and Bison Digital LLC as relief defendants, seeking disgorgement from them. The SEC’s investigation is ongoing, and it is being conducted by the Miami Regional Office.

Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said, “This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.” The SEC’s Office of Investor Education and Advocacy and Enforcement’s Retail Strategy Task Force has issued an Investor Alert on Digital Asset and Crypto Investment and an Investor Alert on Pyramid Schemes Posing as Multi-Level Marketing Programs, providing information on the warning signs of crypto asset investment schemes.

The case highlights the risks that investors face when investing in crypto assets and underscores the importance of due diligence when selecting an investment adviser or fund manager. Investors must remain vigilant and cautious when investing in this space, especially when dealing with promising high returns. As the crypto market continues to grow, regulators must remain vigilant in their efforts to protect investors from fraud and other illegal activities.

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