The US Securities and Exchange Commission (SEC) this week charged John and Tina Barksdale for running a cryptocurrency scam called “Ormeus Coin”, which allegedly defrauded at least 12,000 retail investors of US$124 million.
‘Modern-Day Snake-Oil Sellers’
As per a release by the Department of Justice (DOJ), the SEC alleged the sibling duo sold Ormeus Coin to investors as a legitimate project through in-person roadshows, social media, and even ran advertising on a jumbotron in Times Square.
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.
Melissa Hodgman, SEC’s Division of Enforcement
The Barksdales allegedly misled more than 12,000 investors with false statements, such as that Ormeus Coin had a US$250 million crypto mining operation that produced US$5-8 million in monthly revenues.
The project’s whitepaper, which claims the coin is an ERC-20 token, also included a picture of the mining facility that was supposedly owned by the Barksdales.
This picture of the mining facility, which is actually a data centre owned by a third party, was used throughout 2018 for their marketing campaigns.
Pair Faces up to 20 Years in Prison
The Omeus Coin’s website is still up and running and claims the coin is offered in several exchanges including HitBTC, PancakeSwap, and Uniswap. There’s also dubious claims about the project’s business model, such as being powered by “green energy” and being in possession of Bitcoin, Litecoin, and Dash mining rigs on its facility.
The complaint was filed in the US District Court for the Southern District of New York. The siblings now face up to 20 years’ prison for security and wire fraud.
Crypto Scams and Fraudulent ICOs
Ormeus Coin held an Initial Coin Offering (ICO) in 2017, at a time when the ICO bubble exploded as companies were raising incredible amounts of capital out of investors by just launching and marketing a cryptocurrency project.
Those were golden days for scammers who tried to take advantage of the hype and deceive investors with dubious crypto projects. Just two months ago, Aussie cryptocurrency entrepreneur Craig Sproule was charged by the SEC for defrauding investors in a fraudulent ICO.
He Qin, the Australian-born former crypto hedge fund manager who defrauded Aussie and US investors out of US$90 million, recently said he scammed them because he felt “inmense pressure” to succeed because of his Asian heritage.
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