While many consider the Securities and Exchange Commission’s (SEC) strictness as regulatory hostility towards cryptocurrency, the several acts of fraud in the industry give the regulators a solid reason to crack down on the industry.
Recently, The SEC has stopped another crypto scam in its tracks, as it froze the assets of the Hvizdzaks brothers, who were believed to have been operating multiple crypto scams stealing millions of dollars from the victims.
According to an announcement on June 19, the SEC has now placed a temporary restraining order and asset freeze against two Pennsylvania-based brothers allegedly the masterminds behind three major crypto scam schemes.
The brothers’ Sean Hvizdzak and Shane Hvizdzak, have been lying about the performance of their crypto fund by fabricating financial statements and also moving investor funds to their personal accounts via banks and cryptocurrency exchanges, the SEC noted.
Hvizdzak Capital Management, LLC, High Street Capital, LLC, and High Street Capital Partners, LLC, have now temporarily halter operations after it was ruled by the U.S. District Court for the Western District of Pennsylvania, for violating the anti-fraud provisions of federal securities laws.
$31 million in a year
The ruling comes days after the SEC filed an emergency action with the court on July 16. The SEC’s complaint alleges that the Hvizdzak brothers have been involved with crypto-related fraud since at least July 2019, up until May 2020.
After the accused established a fund described as an investment “in a wide variety of cryptocurrency investments,” in March 2019, the brother managed to collect as much as $31 million in one of the managed accounts.
The complaint further adds that the accused move about $26 million from the funds to their personal accounts at banks and into some well-known crypto exchanges like Binance, Gemini, and Bittrex.
The filing also notes that once the stolen funds were converted into cryptocurrencies, it was hard to trace. Hence, the securities regulator wrote:
“Once this fiat currency, in this case, U.S. dollars, is exchanged for a digital asset, Defendants can transfer the digital assets anywhere in the world with no bank and no government forms.”
As of now, a hearing will be held on June 30, 2020, where the court will consider the further asset freeze and the issuance of a preliminary injunction.
The SEC has been playing a major part in battling crimes related to the crypto-industry. Back in March, the SEC froze the assets of Meta 1 Coin, an alleged crypto scam that promised returns up to 224,923% without ever having any actual tokens.