SEC shuts down two multi-million dollar companies using cryptocurrencies to commit fraud
The U.S. Securities and Exchange Commission (SEC) has charged Aron Govil with defrauding investors in two companies he controlled, including one that the SEC says fraudulently claimed to be developing a crypto mobile payments application.
Source: SEC Press Release
SEC files fraud charges against Florida man in crypto app scam
Aron Govil is the CEO of Cemtrex Inc. and Telidyne Inc. Govil is said to have told investors between April 2019 and May 2020 that the company has developed a “Teli App” that allows users to conduct cryptocurrency transactions on mobile phones and has also begun the development of an app that has detected COVID-19.
According to the SEC complaint, it did not work at all. Moreover, “Teli App” had no cryptocurrency functionality whatsoever, and his Telidyne Inc. did not work on any technologies that would help to detect COVID-19.
According to the SEC complaint, the CEO of Cemtrex misappropriated over $7 million of Cemtrex investor funds between April 2016 and January 2018. Govil used those funds for his personal needs. In addition to embezzling investor funds, Govil also secretly sold Cemtrex stock, paying stock promoters to push the company’s stock to retail investors.
Richard R. Best, director of the SEC’s New York Regional Office, stated that Govil flooded the market with various buying recommendations for Cemtrex company stock and made false statements about mobile app development that would have crypto functionality and help detect the coronavirus. Govil tried to capitalize on the latest popular market trends like cryptocurrencies and COVID-19 for personal financial gains.
“Investors should be wary of online recommendations from unverified sources that appear to capitalize on the latest market trends and seem too good to be true”. SEC stated.
The charges against Govil are part of the SEC’s crackdown on crypto-related fraud. Govil does not admit, but rather denies, the allegations against him. However, he agreed to pay $626,782 in fund management plus interest and a $620,000 civil penalty. Govil may also be subject to additional penalties and grievances if the court deems it appropriate.
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