By Jonathan Stempel
NEW YORK (Reuters) – U.S. authorities on Tuesday filed prison costs towards a cryptocurrency govt and civil costs towards him and his sister, accusing them of defrauding retail buyers out of thousands and thousands of {dollars} with a digital token referred to as Ormeus Coin.
In papers filed in Manhattan federal court docket, the Justice Division mentioned John Barksdale lied concerning the worth and profitability of Ormeus Coin’s mining belongings, together with that the coin was backed by a $250 million mining operation producing greater than $5 million of month-to-month income.
Barksdale and his sister JonAtina Barksdale had been individually charged by the Securities and Alternate Fee with conducting fraudulent unregistered choices of Ormeus Coin.
The SEC mentioned the Barksdales since 2017 raised $124 million from greater than 20,000 buyers via their multi-level advertising firm Ormeus International SA, and spent thousands and thousands of {dollars} on journey, actual property and different private bills.
Authorities mentioned the siblings promoted Ormeus Coin via roadshows and social media, in addition to a Instances Sq. jumbotron in Manhattan proclaiming: “$250 Million Cryptocurrency Mining Farm Revealed in Authorized Audit by Ormeus Coin.”
The Barksdales “acted as modern-day snake-oil salesmen” in deceptive buyers, Melissa Hodgman, affiliate director of the SEC enforcement division, mentioned in an announcement.
Legal professionals for the Barksdales couldn’t instantly be recognized.
John Barksdale has been arrested, and faces as much as 65 years in jail on securities fraud, wire fraud and conspiracy costs, based on the Justice Division.
Each defendants are U.S. residents, with John Barksdale, 41, having lived in Thailand and JonAtina Barksdale, 45, in Hong Kong, the SEC mentioned.
SEC Chair Gary Gensler has referred to as the cryptocurrency trade the “Wild West” of finance and desires cryptocurrency exchanges to register with the SEC.
The White Home has been contemplating broad oversight over the cryptocurrency market, partially to handle ransomware and different cyber crime.
President Joe Biden is anticipated this week to direct the Justice Division and different federal companies to check attainable ramifications from making a U.S. central financial institution digital foreign money, an individual acquainted with the matter mentioned.
The instances are U.S. v. Barksdale, U.S. District Courtroom, Southern District of New York, No. 21-cr-00684; and SEC v. Barksdale et al in the identical court docket, No. 22-01933.
(Reporting by Jonathan Stempel in New York; Enhancing by Will Dunham)