SEC charges sibling fraudsters for $124m crypto fraud operation

The Securities and Exchange Commission (SEC) has charged siblings John and Tina Barksdale with defrauding thousands of retail investors out of over $124m.

The SEC found that the siblings defrauded thousands of retail investors out of the over $124m through two unregistered fraudulent offerings of securities involving a digital token called Ormeus Coin.

According to the SEC’s complaint, the Barksdales offered and sold Ormeus Coin from June 2017 to the present to investors on crypto trading platforms. From June 2017 to April 2018 – through a marketing firm called Ormeus Global – the siblings offered and sold subscription packages that included Ormeus Coin and an investment in a crypto trading program.

To promote the offerings, John Barksdale held roadshows around the globe while his sister led the production of social media posts and press releases. The complaint alleges that at the events in the materials, the defendants falsely claimed that Ormeus Coin was supported by one of the largest crypto mining operations in the world, despite the fact they abandoned their mining operations in 2019 after generating less than $3m in total mining revenue.

As alleged, the defendants falsely stated Ormeus Coin had a $250 million crypto mining operation and was producing $5.4 million to $8 million per month in mining revenues.

To preserve the idea that Ormeus Coin was successfully mining crypto, the siblings arranged for a public website to display a wallet of an unrelated third party showing more than $190 million in assets as of November 2021, even though the Ormeus wallets were worth less than $500,000.

Furthermore, the complaint alleges that the siblings manipulated Ormeus Coin’s price and misused millions of dollars of investor funds for personal expenses.

The complaint was filed in the US District Court for the Southern District of New York and charges the siblings with violating the federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties. The U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against John Barksdale.

SEC Division of Enforcement associate director Melissa Hodgman said, “We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit. We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products.”

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