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HomeCrypto Crime$100 Million Crypto Scam: SEC Sues BKCoin For Alleged Fraud

$100 Million Crypto Scam: SEC Sues BKCoin For Alleged Fraud

The Securities and Exchange Commission (SEC) continues its enforcement actions against the crypto industry, filing an emergency action against Miami-based crypto hedge fund BKCoin and its principal Kevin Kang.

According to the SEC’s complaint, the hedge fund, launched in 2018 by co-founders Carlos Betancourt and Kevin Kang, raised $100 million from more than 55 investors to invest in crypto assets, which its principal Keving Kang used to “make Ponzi-like payments and for personal use.” Eric Bustillo, director of the SEC’s Miami Regional Office, said:

As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct.

Has BKCoin Perpetrated The Industry’s Biggest Scam?

The SEC’s filing against the Miami-based crypto hedge fund alleges that BKCoin and its principal, Keving Kang, “violated” the antifraud provisions of the federal securities laws. According to the SEC’s filing, BKCoin and Kang guaranteed investors that the money would be used to trade crypto assets and produce further profits for BKCoin through its separate managed accounts and five private funds.

In addition, Kang and BKCoin allegedly used more than $3.6 million to make “Ponzi-like” payments to fund investors. In this regard, the SEC alleges that Kang “misappropriated” more than $371,000 of investor funds to pay for vacations, sporting event tickets, and a New York City apartment.

According to the SEC’s complaint, Kevin Kang altered investors’ documents with “inflated” bank account balances to the third-party administrator for some of the capital they had raised since the crypto hedge fund’s launch.

SEC Wipes Out Another Crypto Firm

The complaint also accuses BKCoin of misrepresenting to its investors that the crypto hedge fund or any of the four funds had received an audit report from a “top four” auditor when, according to the SEC, none of the funds received an audit report, anytime between 2018 and 2022.

According to the filing, the SEC’s enforcement action requests “permanent injunctions” against BKCoin and Kevin Kang, disgorgement, prejudgment interest, and a civil penalty against both parties. Eric Bustillo concluded:

This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.
BKCoin co-founder Kevin Kang was previously fired by BKCoin’s core legal entity, BKCoin Management LLC, on October 8 for allegedly misappropriating $12 million in assets from three multi-strategy funds, according to an October 28 filing by the BKCoin legal entity for Miami-Dade County in the state of Florida.

The global cryptocurrency market capitalization is currently at $985.9 billion, still below the trillion dollar mark lost since last week’s Silvergate feud. Today, BTC’s market cap is $432 billion, dominating 40.36% of the sector.

On the other hand, the stablecoins market cap is at $136 billion, with a share of 12.7% of the total crypto market capitalization.


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