The SEC Filed A Lawsuit Against BKCoin For An Alleged $100 Million Encrypted Asset Fraud Scheme

Key Points:

• The United States Securities and Exchange Commission (SEC) has made public the fact that it has initiated an emergency action against BKCoin Management, a hedge fund that specializes in cryptography, for schemes using crypto assets.
• Reports indicate that the company intends to use user cash to make an investment of one hundred million dollars in encrypted assets.

The SEC is suing BKCoin for investing operations using monies for Ponzi payouts and personal use.

The Securities and Exchange Commission (SEC) of the United States announced that it has filed an emergency lawsuit against the encryption hedge fund BKCoin Management and its co-founder Kevin Kang, successfully freezing assets and appointing receivers and other emergency relief personnel, because the company engaged in fraudulent schemes involving crypto assets. BKCoin received roughly $100 million from at least 55 investors between October 2018 and September 2022 to invest in encrypted assets, but BKCoin and Kang utilized part of the cash for Ponzi payouts and personal use.

According to the SEC complaint, BKCoin and Kang informed investors that their funds would be utilized largely to trade cryptocurrency assets, and that BKCoin would create returns for investors through separately managed accounts and five private equity funds. The defendant disregarded the fund structure and mingled Investor assets in order to make Ponzi payments to fund investors totaling more than $3.6 million. 

Kang is also accused of stealing at least $371,000 in investor cash, which he used to pay for holidays, sporting event tickets, and New York City homes. Kang allegedly sought to hide the improper use of investor monies by supplying doctored paperwork that inflated bank account balances to third-party administrators of some funds. Furthermore, BKCoin misled certain investors by claiming that BKCoin or one of the funds had gotten an audit opinion from the “Big Four Auditors,” while in fact neither BKCoin nor any of the funds had received any audit opinion.

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