A former profiteer of the Bitcoin boom has to stand trial. Under the pretence of false identities, he is alleged to have facilitated investors by means of an Initial Coin Offering (ICO) of 30 million US dollars.
The year 2017 marks the last major Bitcoin boom cycle. However, while the Bitcoin exchange rate climbed to undreamt-of heights (at times it scratched the 20,000 US dollar mark), a new way to raise a lot of capital in a short time also appeared. The so-called Initial Coin Offerings (ICO), based on the Initial Public Offering (IPO), promised promising applications coupled with high profits.
ICO: Mass fraud during the Bitcoin boom
The fact that behind the majority of the projects there was a maximum of hot air was only to become apparent later: After the big pump came the dump. What remained were alienated investors, a few rich ICO gurus and a large pile of so-called shitcoins.
For the international law enforcement agencies, this means one thing above all else: work. Little by little, we receive reports of new lawsuits against operators of former ICO scams. As the US news magazine Bloomberg now reports, a former hedge fund fraudster by the name of Boaz Manor has robbed investors of a whopping 30 million US dollars as part of an ICO.
His past and true identity had to be concealed. The 46-year-old lured investors by pretending that his company, CG Blockchain Inc. had a product that was actually only available in fragments. The technology that Bitcoin had created was to be used as a carrier. Because the product was supposed to be able to lock hedge fund transactions onto the blockchain. According to Bloomberg, he falsely stated that a total of 20 hedge funds would pay a million US dollars in fees for the product each year.
He also falsely claimed that his ally, New Jersey-based lawyer Edith Pardo, was on board. As an independent investor, Manor claimed that he had invested three million US dollars in CG Blockchain. As it turned out, this was not true.
Now both have to answer for transfer and securities fraud. They were sued by the Securities and Exchange Commission (SEC). According to Bloomberg, the SEC is complaining:
“Pardo didn’t invest millions in the business, nor did he have any oversight over it. Rather, he acted in such a way that the true influence of Manor remained under lock and key. The defendants also presented false material or misleading statements about the status of the technological products they developed.
No blank page
As it turned out, Manor had apparently been active as a fraudster long before the Bitcoin boom times. So he is said to have sought his fortune in the misfortune of others already in 2003. For example in 2003, when he founded Portus Alternative Asset Management Inc. Behind the title was an asset management company whose assets had been frozen by Canadian authorities. The suspicion: misuse of the collected assets.
According to Bloomberg information, Manor then spent a year behind Swedish curtains in Canada and agreed to pay a fine of 8.8 million Canadian dollars in 2012. In addition, the Canadian regulatory authority banned him from further activities in the investment and securities sector.
The Canadian-Israeli fraudster subsequently had to take on several fictitious identities in order to pursue his activities in the block chain.
The aftermath of the Bitcoin boom
There are also court cases currently underway in other locations, which are dealing with the aftermath of the last Bitcoin boom phase. First and foremost, the ongoing legal proceedings against BitFinex and Tether Limited. Together, the Bitcoin exchange and the stable coin issuer are alleged to have significantly manipulated the Bitcoin price through the uncontrolled pressure of Tether (USDT).
Since the so-called stable coins each represent the value of one US dollar, it is said to have been easy for the companies to throw new coins onto the market and thus counterfeit Bitcoin purchases. Although the evidence speaks against the companies, they deny the allegations.