The U.S. Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC) have filed parallel fraud charges against crypto firms Arbitrade and Cryptobonix and their executives.
The regulators allege the two firms along with executives Troy Hogg, James Goldberg, Stephen Braverman and a self-professed international gold trader, Max Barber, perpetrated a pump-and-dump scheme of the crypto token Dignity (DIG).
Between May 2018-January 2019, the agencies claim Cryptobontix made false announcements that Arbitrade acquired and received $10 billion in gold, and the firm planned to back its DIG tokens at a $1 peg worth of gold.
The companies allegedly told investors that independent accounting firms had performed an audit, verifying the gold. However, the regulators say the acquisition announcements were a fraud aimed at selling DIG tokens at an inflated price, resulting in $36.8 million in DIG sold.
The OSC additionally alleged that Hogg and the companies used investor funds for purposes unrelated to the DIG tokens, including real estate purchases and payments to companies he controlled. It also highlights that Hogg failed to register a sale of DIG tokens with the OSC.
The OSC and SEC collaborated on parallel investigations, according to their statements. The agencies are seeking court orders in their respective jurisdictions that would halt the businesses, require them to pay back ill-gotten gains, bar the executives and firms from holding similar positions and pay to-be-determined monetary penalties.