Fintech CEO Pleads Guilty to ICO and COVID-19 Loan Fraud in the US

Sheng-Wen Cheng, a 24-year-old Taiwanese national, pled guilty to Initial Coin Offering (ICO) and COVID-19 loan fraud in the United States of America.

According to an announcement released by the United States Department of Justice, Justin Cheng pled guilty to major fraud against the United States, bank fraud, securities fraud, and wire fraud in connection with multiple fraud schemes he perpetrated.

Cheng falsified documents to secure as much as $7 million through the Paycheck Protection Program (PPP) being rolled out by the government during the COVID-19 pandemic to support small businesses keep staffs on the payroll.

“Sheng-Wen Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially struggling in the COVID pandemic.  Cheng lied to the SBA and several banks about ownership of his companies, the number of people employed, and how any loan proceeds would be applied, using forged and fraudulent documents in the process.  Cheng spent much of the money on personal luxury items,” said U.S. Attorney Audrey Strauss.

With the acquired funds, Cheng reportedly transferred as much as $1 million abroad and spent the rest lavishly on a $40,000 Rolex, rent for a $17,000 a month apartment, and a 2020 Mercedes, among other things. Cheng, who entered the US through a Student Visa, also fronted the Alchemy blockchain company, where he received ICO funds from investors.

Per his guilt plea, he could face up to 30 years of jail time. However, the DOJ noted that the final sentencing will be determined by a Judge.

While securing COVID-19 relief funds illegal is out of place, Americans are reportedly known to be in the act of investing their stimulus cheques in digital currencies, which many believe is a better store of assets amid ravaging economic uncertainty.

Image source: Shutterstock


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Automated Crypto Investing App Coinseed Faces Fraud Charges In NY, SEC Suits

Coinseed Inc, an automated crypto investing app, is facing allegations of defrauding investors and breaking U.S. registration laws in a pair of legal actions brought Wednesday by the U.S. Securities Exchange Commission and the State of New York.

The app-based service bilked investors of $1 million through hidden fees, false claims and a flopped token, New York Attorney General Letitia James alleged in her state’s suit. She charged Coinseed, which did not have a BitLicense or federal clearance, with running an unregulated securities and commodities trading shop.

James said she seeks to shutter Coinseed and ban its executives Delgerdalai Davaasambu and Sukhbat Lkhagvadorj from participating in future investment plays. The state is seeking monetary relief for victims through the courts.

Coinseed faces a related suit from the SEC, James said in her press release. Those federal-level filings were not available at press time Wednesday.

This story is developing and will be updated.



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SEC Charges Three of Stealing $11.4M Through Token Backed by Actor Steven Seagal

The U.S. Securities and Exchange Commission (SEC) on Monday charged three associates of defunct crypto firm Bitcoiin2Gen with defrauding investors of $11.4 million through the 2018 B2G token offering infamously peddled by actor Steven Seagal.

Bitcoiin2Gen and Start Options founder Kristijan Krstic and company promoter John DeMarr allegedly violated federal securities laws during the 2018 raise with DeMarr associate Robin Enos “aiding and abetting,” according to the SEC. DeMarr also faces criminal fraud charges in a parallel suit filed Monday.

The trio allegedly promised to deliver Bitcoiin2Gen’s investors an Ethereum-based token the SEC claims never existed. They allegedly disseminated misleading brochures among 460 investors to whom they’d promised a “mineable” and “tradeable” digital token – B2G – selling the sham for funds they never returned.

Bitcoiin2Gen also banked on the blessing of actor Steven Seagal, whom Krstic and DeMarr (through a pseudonym) trotted out as a “brand ambassador” instead of a promoter earning $120,000 to pump B2G. Seagal, who was not named in the Monday suit, settled related charges last February.

The charges bring the regulator’s ICO crackdown into its second presidential administration. Regulators first began pursuing allegedly fraudulent ICO projects during then-President Trump’s administration, but appear poised to continue that trend under Biden’s team.



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