SEC Sues Four In $8.4M Crypto Fraud Targeting Spanish-Speaking Community

On Friday, the Securities and Exchange Commission announced it charged four individuals over their involvement in the crypto-related pyramid scheme Forcount Trader Systems, Inc. The four allegedly defrauded hundreds of investors and primarily targeted the Spanish-speaking community.

SEC Presses Charges Over Forcount Trader Systems, Inc. Pyramide Scheme

According to the SEC, the four charged individuals—Francisley Valdevino Da Silva, Juan Antonio Tacuri Fajardo, Ramon Antonio Perez Arias, and Jose Ramiro Coronado Reyes—orchestrated and promoted a scheme under the name Forcount Trader Systems, Inc.Retail investors were lured in with the promise of guaranteed returns resulting from investments in “memberships” in the organization. The “memberships” were marketed as giving victims an interest in profits from the scheme’s cryptocurrency trading and mining operations—operations that, in fact, never existed.

According to the SEC’s complaint, from approximately July 2017 to November 2020, Brazilian national Da Silva and U.S.-based promoters Tacuri, Perez, and Coronado enticed and defrauded investors out of millions of dollars with the promise of guaranteed returns resulting from investments in “memberships” in Forcount Trader Systems. These memberships purportedly gave investors an interest in profits from Forcount’s supposed crypto asset trading and mining operations. Investors could also participate in Forcount’s referral program, which, as the complaint alleges, incentivized recruiting new victims. The complaint alleges that the defendants knew or were reckless in not knowing that Forcount had no crypto asset trading and mining operations and that the only way the scheme could continue was by increasing the investor base.

The SEC alleges that the co-conspirators raised at least $8.4 million from their victims and spent much of the money on “homes, cars, and luxury goods.” The Department of Justice announced its own charges against de Silva and Tacuri on December 14th for their involvement with Forcount Trader Systems, Inc.

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Crypto-Related Fraud in 2022

There have been multiple cryptocurrency-related fraud cases throughout 2022, and a recently-released FSOC annual report estimated that about 40% of digital asset complaints received by the CFPB’s Consumer Complaint Database between 2018 and 2022 have been either a “fraud” or a “scam”. The actions filed by the regulators are also numerous and varied with some describing schemes targeting individuals, and others attempting to defraud institutions.

In late August, the SEC filed a complaint against a trio in Miami that ran an operation that scammed multiple banks and a cryptocurrency exchange out of at least $4 million. In September, the Commission charged a firm called Arbitrade over a coin offering that was represented as being backed by $10 billion worth of gold bullion.

While there have been multiple cases of fraud throughout the year, the case of the recently-collapsed FTX is perhaps shaping up to be the biggest one yet. Not only was its founder and former CEO Sam Bankman-Fried recently arrested in the Bahamas, but it has also been revealed that the DoJ, the CFTC, and the SEC all pressed multiple charges against him mostly centering on the allegations of wire fraud, securities fraud, and money laundering.

Do you think the regulators will ever manage to curtail fraud within the crypto sector? Let us know in the comments below.