SEC Sues Alleged $26 Million ‘Crypto’ Ponzi Scheme Operator | ELEVENEWS
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SEC Sues Alleged $26 Million ‘Crypto’ Ponzi Scheme Operator



The U.S. Securities and Exchange Commission (SEC) is suing a California resident on charges of selling unregistered securities and conducting a Ponzi scheme disguised as a cryptocurrency.

The SEC announced Thursday that it had filed for an injunction against Daniel Pacheco, claiming that he sold unregistered securities through IPro Solutions LLC and IPro Network LLC, giving investors “points” which they could theoretically convert to PRO Currency, a digital asset affiliated with the companies.

Pacheco allegedly raised $26 million through the scheme.

Moreover, investors in the project could earn extra points or cash commissions by recruiting new members to the network, a common facet of Ponzi schemes.

In a statement, Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said that the respondent “hid an old fraud under the guise of cutting-edge technology,” adding:

“He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme.”

Pacheco allegedly used the funds he raised to purchase a $2.5 million home and a Rolls Royce, resulting in him being unable to pay his investors’ cash commissions or other bonuses.

In its release, the SEC said that “Pacheco’s offer and sale of IPro instructional packages constituted an unregistered sale of securities because the IPro instructional packages involve (i) an investment in a pyramid scheme; and/or (ii) an investment in the PRO Currency digital assets, and therefore must be registered with the SEC unless an exemption applies.”

In its actual complaint, the SEC also lists seven entities or people that allegedly possess funds belonging to IPro’s investors, though they are not accused of any wrongdoing.

Data site CoinMarketCap lists a ProCurrency, trading around 0.196 cents as of press time. However, it is unclear whether this is the same cryptocurrency involved in the scheme.




SEC continues to divide and conquer the whole industry, says Kik CEO Ted Livingston



Recently, Ted Livingston, the CEO of Kik, a Canadian-based messaging startup, shed light on the on-going case with the United States Securities and Exchanges Commission [SEC], in an interview with Ran NeuNer for CNBC Crypto Trader.

The discussion on the topic began by Livingston speaking about the first time the team was contacted by the United States regulatory authority. He stated that they first heard from the commission 3 days after the completion of their token sale, which was held over 18 months ago. He further stated that the initial interaction was a ‘friendly’ one, with the commission wanting to know more about what they were doing. He went on to state,

“Then, there were subpoenas and then testimony and finally they issued us what’s called the Wells notice, November last year. We issued our Wells response. We took both those things public in January and then finally we recently said what’s enough is enough, let’s go public. Let’s go to court.”

This was followed by the CEO speaking about whether they were expecting to be sued by the SEC. On this, Livingston stated that that they “weren’t sure”, adding that the one matter they were clear about was that the crypto-industry needed more regulatory clarity “one way or the other”.

He stated,

“we said to the SEC, ‘you’ve let us know that there’s infraction here. We’re going to tell the world that.’ So, one way or the other, you’re going to give us clarity here. Either you chose to go ahead or we’re going to fight this out in court and you back down and that in itself will be guidance.”

Further, Livingston was asked about their decision to go up against the commission. He stated that the commission originally had good intentions. However, he added that they have learned that the commission “continue[s] to divide and conquer the whole industry”, adding that everyone was “in this state of fear of what the SEC [would] think”.

He further stated

“And at this point, this is having a real impact on our ability to compete on a global stage.”

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SEC Charges Kik for conducting a $100 Million unregistered ICO Ken Chigbo Ken Chigbo FXStreet Follow



  • The SEC has charged a Kik for a $100 million ICO which was not registered with the U.S. securities laws.
  • Kik financed its new type of business back in early 2017 via the sale of one trillion digital tokens.


U.S. regulator, the Securities and Exchange Commission has taken action and sued Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens.

The SEC has charged Kik for selling the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.

Within the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application. The management of Kik had forecasted that it was going to run out of funds in 2017. Kik had sought to pivot a new type of business early in 2017. It was financed via the sale of one trillion digital tokens.  Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors.  The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.



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The SEC Is Suing Kik for Its 2017 ICO



The U.S. Securities and Exchange Commission (SEC) is suing Kik for allegedly running an unregistered securities sale when it launched an initial coin offering (ICO) for its kin token in 2017.

In a filing submitted Tuesday in the Southern District of New York, the SEC said Kik violated Section 5 of the Securities Act of 1933, which requires offerings to be registered.

“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, co-director of the SEC’s Division of Enforcement. “Companies do not face a binary choice between innovation and compliance with the federal securities laws.”

As alleged in the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017. Kik’s losses averaged about $30 million a year, according to the SEC, and earlier attempts by Kik to be acquired by a larger technology company had failed, with seven potential suitors all declining to buy or merge with the company.

In early 2017, Kik sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens. The company sold its kin tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors. The SEC complaint alleges that kin tokens traded recently at about half of the value that public investors paid in the offering.

According to the complaint, the Ontario Securities Commission previously told the Waterloo, Canada-based Kik that kin appeared to be a security.

Earlier this year, the company told the Wall Street Journal it planned to take the SEC to court if the agency brought an enforcement action against the project.

Last month, Kik CEO Ted Livingston said the company had already spent $5 million engaging with the SEC. Kik then launched a $5 million “Defend Crypto” crowdfunding campaign to support a potential lawsuit.

Kin is used across a suite of mobile apps. Kik has been using its ICO funds to support the development of new marketplaces for people to earn and spend the cryptocurrency, which runs on its own blockchain.

In a statement Tuesday, Livingston said:

“This is the first time that we’re finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build things.”

Kin’s price tanked on the news of the SEC lawsuit, falling more than 25 percent within two hours of the lawsuit’s announcement.



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