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Busted! SEC Catches Up with a DeFi Firm Illegally Raising $30 Million


would stop investing–until it became clear how bad things really were.SEC charges two Florida men with selling unregistered securities on a decentralized finance platform.

The US Securities and Exchange Commission (SEC) has charged the two Florida men for allegedly scamming $30 million worth of unregistered securities by using the blockchain-based DeFi system, also known as distributed finance or Dfinity.

According to the SEC announcement, these are not your typical penny stocks that have been sold at questionable IPOs in decades past.

Instead, they were high-risk investments like ELIXIR tokens which did not exist before January 1st, 2018 but still generated significant profits through their coordinated day trading scheme.

Two of the defendants, Gregory Keough and Derek Acree mislead investors with falsified reports.

The Friday press release “further elaborated” that these two men misled stockholders by falsifying their operations to make them look more profitable than they actually were in order to get a higher share price from potential buyers.

The SEC has caught the two suspects and their company Blockchain Credit Partners. The duo is accused of offering unregistered securities through DeFi Money Market (DMM).

The DMM was a platform designed for the exchange between cryptocurrency assets, which led to some confusion as many people thought that it would be backed by well-known financial institutions such as Goldman Sachs or JPMorgan Chase.

However, this is not the case. Instead, any user can use funds from these firms in order to invest in other cryptocurrencies on the site without having an account with them.

That makes it rather unregulated when compared to traditional exchanges like Coinbase where users need accounts opened before they can trade coins.

The company had two tokens, one of which paid holders an interest rate of 6.65%, while the other was a governance token for the blockchain network.

The operations ran between February 2020 and 2/2021, during which time both types were offered in like manner to any other investment opportunity on Wall Street at that time:  The first type paying out annualized returns ranging from 4% – 7%.

The company announced that they plan to reinvest the proceeds from their ICO in real-world assets. The investment will generate income and payout interest on tokens.

The announcement has big implications for investors. Not only does it provide a new way to earn money by investing early but also ensures stability through diversification into stocks or commodities such as gold, silver, and oil futures contracts

The two entrepreneurs were at a crossroads. The digital assets they used to purchase the DMM tokens had too much volatility and prevented them from generating any sustainable income, which was making investors nervous about their investments.

Rather than telling everyone that there might be an issue with purchasing these tokens in this market environment, the duo continued acting as if everything was going well so that no one


Multiple Violations

The United States Security Exchange Commission (SEC) released a statement claiming they have determined what type of asset is being sold by DMG: securities or commodities?

They also claim to be bringing charges on behalf of themselves alongside team members Damian Merlone and Francesco Rulli, who are running both public companies together – because there was an alleged violation from several sections within financial law which includes Freedom from Fraud And Manipulation Of Prices Section 17(a)

The Securities and Exchange Commission has charged Acree with a number of fraud charges.

As part of the settlement, both he and Keough must now disgorge $12.85 million to be returned into investor’s pockets and each has been fined an additional penalty for their misdeeds which is set at $125,000 per person involved in this case.

Today’s latest technology is not enough to get by with fraud. The SEC will be right on your tail (and neck) and won’t stop until you’re in jail for life. Unless of course, it’s a nice prison that offers free meals!

Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, Daniel Michael, emphasized that the federal securities laws apply equally to all. No exceptions, no VIPs.

That includes those who are looking to take advantage of the rest of us through age-old schemes wrapped up as “cool” new technology like blockchain or cryptocurrency investments.

However, these didn’t last long because they were so easy prey for authorities – anyone could see what was happening!

Concerning that, he adds, “Here, the labeling of the offering as decentralized and the securities as governance tokens did not hinder us from ensuring that DeFi Money Market was immediately shut down and that investors were paid back.”

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