SEC shatters Ponzi scheme “Profit Connect” with alleged $ 12 million crypto fraud

The United States Securities and Exchange Commission (SEC) is taking action against cryptocurrency fraud organized by Profit Connect Wealth Services Inc.

Brent Kovar – Founder of Profit Connect

Through an emergency lawsuit, the SEC obtained an injunction and an asset freeze to halt Profit Connect operations. Profit Connect advertises on its website as the leader in supercomputer software for artificial intelligence, headquartered in Las Vegas, Nevada.

The SEC’s reputation has suffered following the lawsuit against Ripple. XRP holders argued that the SEC was acting contrary to its primary duty to protect investors.

In this case, however, the SEC proves it continues to protect investors by freezing the bad guys’ accounts.

Profit Connect promises huge profits

As of May 2018, Joy Kovar, 86, and her son Brent Kovar, 54, are said to have raised more than $ 12 million from around 277 private investors in a complex project that uses advanced artificial intelligence (AI).

Kovars allegedly told victims that their funds would be invested in trading stocks and cryptocurrencies based on the recommendations of a “supercomputer”.

This supercomputer should always generate huge profits, so Profit Connect guarantees investors a fixed return of 20 to 30% per year with monthly compound interest.

In addition, the SEC alleges that the defendants did not use the proceeds to trade securities or purchase cryptocurrencies. Instead, they allege that the defendants misused the funds in various ways, including transferring funds to Joy Kovar’s personal account, paying promoters, and setting up a Ponzi-like affiliate system to attract more people.

Profit Connect Compensation Plan

Michele Wein Layne, director of the SEC’s regional office in Los Angeles, said investors should be wary of those that offer guaranteed, risk-free returns.

“As we claim, the defendants target investors looking for safe products for their children’s retirement and education, and offer money-back guarantees based on results.

Beware of ransomware

Chainalysis data shows that cryptocurrency is on the decline. The researchers found that criminal activity accounted for only 0.34% of all crypto activity in 2020. In the previous year it was 2.1%.

Since 2017, fraud has become the largest illegal activity. While 2020 was no different, Chainalysis saw a significant increase in ransomware activity while scams decreased.

“The big story of cryptocurrency in 2020, however, is ransomware. That may sound like a paradox, given that ransomware only accounts for 7% of all funds received from criminal addresses with a crypto value of just under $ 350 million. But that number represents a 311% increase from 2019.

For better or worse, ransomware is outside the purview of the SEC, which is charged with dealing with securities fraud. Therefore, in addition to Layne’s advice on the promise of guaranteed returns, investors should also protect themselves by carefully clicking on links from uncertain sources.

Mr. Teacher

According to Cryptoslate

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