3 ms·

Here's a recent case where the SEC litigated misappropriation of funds among other things: "According to the SEC's complaint, the defendants misappropriated ne

by ac29 4y ago

Here's a recent case where the SEC litigated misappropriation of funds among other things: "According to the SEC's complaint, the defendants misappropriated nearly $4 million of investor funds. The SEC also alleges that Chiang and Tippetts misused additional Sharenode investor funds by spending at least 133 bitcoin to list NSG tokens on an unregistered trading platform and to fund a team of captive traders to trade NSG tokens amongst themselves to create the false appearance of a robust market with increasing prices. These traders allegedly created the false impression that more than $2.5 million worth of NSGs were traded daily on BitForex during the first 60 days and that the price of NSGs was steadily increasing due to investor demand. According to the complaint, however, the manipulation scheme collapsed when investors tried to sell their NSG tokens, because there were no actual buyers, causing the token's trading price and volume to fall precipitously." This isnt exactly a classic "rugpull", but it does make it fairly clear that you cant just take customer funds and use them however you'd like just because its a cryptotoken and you have access to the smart contracts controlling it. You really shouldnt use customer funds in furtherance of additional frauds, like these people did here. https://www.sec.gov/litigation/litreleases/2022/lr25377.htm https://www.sec.gov/litigation/litreleases/2022/lr25377.htm

paulmd 4y ago
That doesn't really turn on any crypto-related concepts at all, but rather false/deceptive disclosures about the security itself. That actually would be equally illegal to do with regular securities too - you don't fuck around with disclosure documents, that's an absurdly easy way to go straight to jail. > These traders allegedly created the false impression that more than $2.5 million worth of NSGs were traded daily on BitForex during the first 60 days and that the price of NSGs was steadily increasing due to investor demand. According to the complaint, however, the manipulation scheme collapsed when investors tried to sell their NSG tokens, because there were no actual buyers, causing the token's trading price and volume to fall precipitously." This is also the fund owners doing something nefarious - that doesn't mean that somebody else executing a transaction according to the contract and the market could be held accountable because the fund's customers lost money. Someone has to be on the other end of every transaction, that is how a market works.

by ac29 4y ago

paulmd 4y ago

That doesn't really turn on any crypto-related concepts at all, but rather false/deceptive disclosures about the security itself. That actually would be equally illegal to do with regular securities too - you don't fuck around with disclosure documents, that's an absurdly easy way to go straight to jail. > These traders allegedly created the false impression that more than $2.5 million worth of NSGs were traded daily on BitForex during the first 60 days and that the price of NSGs was steadily increasing due to investor demand. According to the complaint, however, the manipulation scheme collapsed when investors tried to sell their NSG tokens, because there were no actual buyers, causing the token's trading price and volume to fall precipitously." This is also the fund owners doing something nefarious - that doesn't mean that somebody else executing a transaction according to the contract and the market could be held accountable because the fund's customers lost money. Someone has to be on the other end of every transaction, that is how a market works.