The Securities and Exchange Commission (SEC) has charged eight individuals with involvement in a fraudulent investment scheme that raised over $45 million from the sale of unregistered securities to thousands of investors worldwide. The scheme, known as CoinDeal, was allegedly run by Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, and Linda Knott, who claimed that investors could earn huge returns by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to wealthy buyers. According to the SEC's complaint, which was filed in the U.S. District Court for the Eastern District of Michigan, the defendants falsely stated that the value of CoinDeal was high and that a group of prominent and wealthy buyers were interested in purchasing it for trillions of dollars. They also allegedly lied about the use of investment proceeds and disseminated false and misleading information to investors from at least January 2019 to 2022. However, the SEC's complaint states that no sale of CoinDeal ever took place and that the defendants used investor funds for personal use and misappropriated millions of dollars, with Chandran allegedly using the funds to purchase items such as cars, real estate, and a boat.
In addition to the SEC's charges, Chandran was also indicted by the U.S. Department of Justice in June 2022 on three counts of wire fraud and two counts of monetary transaction in unlawful proceeds for his involvement in CoinDeal. The SEC's complaint charges Chandran, Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with violating the antifraud and registration provisions of the Securities Act and Exchange Act, and Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with aiding and abetting certain of Chandran's violations of the antifraud provisions of the Exchange Act. Mossel and AEO Publishing are also charged with aiding and abetting Glaspie's violations of the antifraud and registration provisions of the Securities Act and Exchange Act. The SEC's complaint seeks disgorgement plus pre-judgment interest, penalties, and permanent injunctions against all defendants, officer and director bars against Chandran, Davidson, Glaspie, Knott, and Mossel, and a conduct-based injunction against Chandran. The SEC's investigation is being conducted by the Chicago Regional Office and the litigation will be led by Michael D. Foster, also of the Chicago Regional Office. The SEC has received assistance from the Michigan Department of Licensing and Regulatory Affairs and Florida Office of Financial Regulation.BY