SEC Convicts Blockchain Terminal Fraudsters

The SEC convicted Boaz Manor, who was under investigation since marketing a Bloomberg Terminal knock-off during the ICO boom.

On Dec. 17, 2020, the Securities Exchange Commission concluded their investigation into CG Blockchain Inc. and BCT Inc. SEZC with a conviction of Boaz Manor and his associate, Edith Pardo. The two raised over $30 million via fraudulent initial coin offering.

Both Manor and Pardo enticed investors from around the world to contribute funds to what can best be understood as a crypto equivalent of the Bloomberg Terminal. Attracted by the idea, and riding high on the ICO craze, victims eagerly handed over funds.

In the end, however, it became clear that the product, the promises, and even the identity that Manor used to convince investors of future riches was a lie.

The SEC’s report states:

“The complaint alleges that the defendants claimed to have 20 hedge funds testing technology to record transactions on a distributed ledger or blockchain. In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it.”

Manor allegedly “darkened his hair, grew a beard,” and went by the name “Shaun McDonald,” according to the report. He disguised himself to prevent potential investors from discovering that Manor had already spent a year in prison following the dubious implosion of another hedge fund in Canada, his home country.

Revealing his identity would mean BCT Inc. SEZC would be “destroyed,” according to Manor.

The SEC’s specific complaint revolves around the defendants’ failure to comply with securities and anti-fraud registrations. As punishment, neither Manor nor Pardo will be allowed to hold office in any publicly-traded companies and are barred from future securities offerings, according to the Commission.

Although the ICO frenzy has concluded, U.S. authorities continue to prosecute wrong-doers. Back in Dec. 2019, the SEC convicted Eran Eyal of raising $42 million for a marketing system that never existed. They charged him with two Class E felonies and over $1 million in restitution and disgorgement. He too is barred from heading any business or leading future offerings.

It’s not just ICOs, either. The SEC published a warning on Jan. 14, 2020, about Initial Exchange Offerings (IEOs), which have been branded “safer” than ICOs by many in the crypto community.

Although crypto projects hosted on the likes of Binance, Bittrex, and several others, are vetted before listing, the Commission reminded this vetting process does not waive due diligence. The SEC added that many of these exchanges may be acting as “broker dealers” and would need to register with the Commission.

As the effects of 2017 unwind, there’s no doubt that the SEC will continue to prosecute fraudsters.

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