SEC uncovers $27m crypto pyramid targeting African immigrants

The U.S. Securities and Exchange Commission (SEC) has accused two companies and their executives of running a Ponzi scheme. Preliminary estimates put the pyramid’s victims at about 1,200 investors who lost more than $27 million.

SEC charges Ponzi scheme targeting African immigrants https://t.co/lyrs3RSViJ

— SEC_News (@SEC_News) August 28, 2020

According to the regulator’s complaint, Dennis Jali, John Frimpong and Arli Johnson directly and through their companies 1st Million LLC and Smart Partners LLC misled investors. The defendants stated that a team of experienced traders used funds to trade on cryptocurrency and forex markets, promising risk-free returns of up to 42%.

The SEC noted that the scheme’s organizers focused activity on African immigrants, using religious identity and cultural closeness to win investor trust.

“We urge all investors to be vigilant when offered investments promising low risk and guaranteed returns, including from members of the community they trust,” said Kelly Gibson, Director of the SEC’s Philadelphia Regional Office.

In parallel to the SEC’s ongoing investigation, the Maryland district attorney’s office filed criminal charges. The U.S. Commodity Futures Trading Commission (CFTC) filed a civil lawsuit.

In the complaint filed in the federal court in Greenbelt, Maryland, the SEC charged the defendants with violations of the antifraud provisions of federal securities laws.

The regulator is seeking restitution of ill-gotten gains with interest accruing up to the verdict and the imposition of penalties.

Earlier, the CFTC demanded through the court that the organizer of the cryptocurrency pyramid pay a penalty of $429 million, including $147 million in principal.

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