SEC sues Chicago Crypto Capital for misleading investors
The low-key company, started by former Chicago Precious Metals Exchange employee Brian Amoah, sold securities of crypto assets called BXY to around 100 people from August 2018 to November 2019, according to the complaint. Many of these investors “had no experience investing in crypto assets,” the lawsuit states. Read the lawsuit below.
BXY was a token created to be traded on an exchange created in 2019 called Beaxy. Chicago Crypto Capital formed an alliance with Beaxy to sell the tokens — and for many months, CCC only sold promises to deliver tokens in the future once the exchange was established, according to the complaint.
Amoah and two associates, all of whom are defendants in the lawsuit, failed to determine potential investors’ experience with crypto, how much they should invest, or if they could afford to lose what they had invested. , according to the lawsuit.
“For example, one of the BXY (company’s) clients was an elderly person with no prior knowledge or experience of crypto assets,” the lawsuit states. “This investor relied on (CCC) to educate him on crypto assets. However, (the trade representative) himself had no personal experience with investing in crypto assets and did not disclose this fact. This investor told (to the sales representative) that she had to preserve her assets for her retirement and that she could not afford to lose her investment. However, (the representative) assured the investor that BXY was a safe investment. After many phone conversations, text messages and emails, (the representative) persuaded this investor to buy a total of $47,000 in BXY tokens, which are essentially worthless today.
Amoah did not respond to a LinkedIn request for comment.
Chicago Crypto Capital also failed to disclose to investors how much it earned from the sale of each token. A five cent purchase of a token would include three cents that would go to Chicago Crypto Capital and about 2 cents that would end up with Beaxy, according to the complaint.
The SEC wants the court to bar the company and individual defendants from selling crypto securities and return “ill-gotten” gains from the conduct alleged by the lawsuit. The agency also wants Amoah barred from serving as a director or officer of SEC-regulated companies.