The U.S. Securities and Exchange Commission announced that it filed an emergency action against Miami-based investment adviser BKCoin Management LLC and one of its principals, Kevin Kang, in connection with a crypto asset fraud scheme.

According to SEC, from at least October 2018 through September 2022, BKCoin "raised approximately $100 million from at least 55 investors to invest in crypto assets". However, the fund was not used as intended, BKCoin and Kang use the money to make Ponzi-like payments and for their personal expenses.

The Securities and Exchange Commission (SEC) has filed a complaint against BKCoin and Kang, accusing them of misrepresenting to investors that their money would be primarily used to trade crypto assets. According to the complaint, BKCoin and Kang represented that BKCoin would generate returns for investors through separately managed accounts and five private funds. However, the defendants allegedly disregarded the structure of the funds, commingled investor assets, and used more than $3.6 million to make Ponzi-like payments to fund investors.

The complaint also alleges that Kang misappropriated at least $371,000 of investor money for personal expenses, including vacations, sporting events tickets, and a New York City apartment. In an attempt to conceal the unauthorized use of investor money, Kang provided altered documents with inflated bank account balances to the third-party administrator for certain of the funds.

Moreover, the complaint asserts that BKCoin made false representations to some investors, claiming that BKCoin or one of the funds had received an audit opinion from a "top four auditor," when in reality, neither BKCoin nor any of the funds received an audit opinion at any point.

“As we allege, investors entrusted their money to the defendants to trade in crypto assets. Instead, the defendants misappropriated their money, created false documents, and even engaged in Ponzi-like conduct,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “This action highlights our continued commitment to protecting investors and uprooting fraud in all securities sectors, including the crypto asset arena.”