SEC Halts ICO, Charges Argyle Coin, Jose Angel Aman, Others with $30 Million Ponzi Scheme

SEC Halts ICO, Charges Argyle Coin, Jose Angel Aman, Others with $30 Million Ponzi Scheme

On May 20th 2019, the U.S. Securities and Exchange Commission (SEC) was granted an emergency court order entailing a temporary restraining order and temporary asset freeze against Jose Angel Aman, Argyle Coin, and other companies charged as relief defendants. More than $10 million of investor funds from unregistered offerings were allegedly embezzled.

The SEC’s Halting of Argyle Coin’s ICO Explained

According to the SEC, Florida-based Argyle Coin and its principal, Jose Angel Aman, were behind a $30 million ponzi scheme.

The ICO targeted over 300 investors throughout the U.S. and Canada, claiming the offering was 100% guaranteed by an insurance bond.

The fraud is allegedly a continued scam which Aman facilitated with two other companies he owns— Natural Diamonds Investment Co. and Eagle Financial Diamond Group Inc. Both of which conducted unregistered securities offerings as early as 2014, where Aman told investors that diamonds would be cut down and sold for huge profits.

According to the SEC, Aman collaborated with Harold Seigel and Jonathan H. Seigel to deceive prospective investors of Argyle Coin by claiming the investment was risk-free since it was backed by diamonds.

Seigel publicly advertised the investment as paying a 24% annual ROI.

From December 2017 until the date of the court order, Argyle Coin, Aman, and the Seigels sold investments as part of a supposed ICO through a cryptocurrency abbreviated as RGL. The digital asset was said to be backed by real diamonds, and received numerous positive ratings on many ICO rating websites.

In the end, more than $10 million in investor funds were allegedly misappropriated. The funds were spent on the purchase of horses, housing, and luxurious personal expenses. Aman paid his church more than $1.5 million and himself over $3 million.

As of March 31st 2019, the SEC says the accounts had a cumulative negative balance of approximately $120,000.

How Increased Regulatory Enforcement has Led to Security Tokens

Within the the last year, regulatory enforcement in the digital asset realm has drastically increased.

The CFTC recently stuck 1pool ltd. with a $900,000 penalty.

The SEC has not only targeted fraud, but they’ve also penalized ICOs and digital asset exchanges for failing to comply with the SEC’s requirements.

In fact, SEC Chairman Jay Clayton has said that nearly every ICO he has seen, constitutes a securities offering.

As a result, the digital asset industry has seemingly left the ICO behind, and turned to the Security Token Offering (STO) as a viable alternative.

Security tokens algorithmically enforce the SEC’s existing securities laws and regulations, and therefore provide much of the regulatory compliance which is absent in ICOs.

With increased levels of fraud surrounding ICOs, regulatory enforcement is expected to increase even more.

Consequently, ICOs currently raise 58 times less than they did at this time last year, while STOs saw a 130% increase in Q1 2019.

What do you think of the SEC’s action against Argyle Coin and Jose Angel Aman? What does the future of ICOs look like to you? We want to know what you think in the comments section below.

Image courtesy of the SEC.