The U.S. Securities and Exchange Commission (SEC) announced an emergency action against the operators of the crypto fraud scheme BKCoin. The regulator successfully obtained an asset freeze, appointment of a receiver, and other emergency relief against Miami-based investment adviser BKCoin Management LLC and one of its principals, Min Woo Kang a/k/a Kevin Kang, in connection with the BKCoin crypto asset fraud scheme, which raised $100 million.
From at least October 2018 through September 2022, BKCoin raised approximately $100 million from at least 55 investors to invest in crypto assets. BKCoin and Kevin Kang assured investors that their money would be used primarily to trade crypto assets and represented that BKCoin would generate returns for investors through separately managed accounts and five private funds.
However, Kang commingled investor assets and used more than $3.6 million to make Ponzi-like payments to fund investors. Kang misappropriated at least $371,000 of investor money to, among other things, pay for vacations, sporting events tickets, and a New York City apartment.
Kang attempted to conceal the unauthorized use of investor money by providing forged documents with inflated bank account balances. BKCoin falsely claimed that it received an audit opinion from a “top four auditor,” when in fact, neither BKCoin nor any of the funds received an audit opinion at any time.
The SEC alleges that BKCoin and Kevin Kang violated the antifraud provisions of the U.S. securities laws. The complaint seeks permanent injunctions against both of the defendants; disgorgement, prejudgment interest, and a civil penalty from both of the defendants; and, an officer and director bar and conduct-based injunction against Kang. The complaint names as relief defendants, and seeks disgorgement from, each of the funds and Bison Digital LLC, an entity that allegedly received approximately $12 million from BKCoin and the funds. The court also granted emergency relief against the relief defendants, which the SEC sought, including the appointment of a receiver.
