The SEC “emergency” halted the Digital Licensing pyramid scheme in Utah. They would have defrauded investors out of up to $50 million in Bitcoin and Ethereum. The fraudulent scheme was planned from March 2021 to sell unregistered securities under the title “node license”.
The United States Securities and Exchange Commission (SEC) announced the “emergency” stop of a fraud scheme carried out by Utah-based cryptocurrency company Digital Licensing. The fraudulent crypto scheme would be for 50 million dollars and would involve 18 people.
The SEC admitted that it received “emergency help” from authorities to stop the Digital Licensing fraud scheme, obtaining a temporary asset freeze, a restraining order, actions against the company’s four directors, as well as other emergency measures. The platform operated as a “DEBT Box”.
SEC: Digital Licensing Scammed Investors with Bitcoin and Ethereum
The Digital Licensing officers charged are Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson, who along with 13 others ran a $50 million fraud scheme. The scheme purported to sell cryptocurrency to hundreds of Americans. The scam would have received deposits in Bitcoin and Ethereum.
The United States District Court for the District of Utah holds that the fraudulent scheme was planned since March 2021 to sell unregistered securities under the title “node license”, which would allegedly generate cryptocurrency tokens through mining. It promised that generating companies would “boost” the value of the tokens.
Digital Licensing promised to generate tokens called “DEBT Box”, which, upon entering investment, resulted in million-dollar profits for managers and some investors. The SEC maintains that the “node licenses” were fake because they were “a front” to hide that each token in the supply was a code on a Blockchain.
Tracy S. Combs, Salt Lake regional SEC director, explained the following:
“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining. We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”
Furthermore, the SEC’s complaint alleges that DEBT Box and its principals, along with defendants James Franklin, Western Oil Exploration Company Inc., and Ryan Bowen, lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens.
SEC Will Follow the “Hunt” of Digital Licensing Executives
The Stock Exchange Commission will seek that the managers return all the illicit profits and for this, the investigation will continue, while they seek to gather the assets for the benefit of the affected investors. The SEC has been very vigilant when it comes to securities fraud in recent years. especially when the alleged values fall under the umbrella of cryptocurrencies.
According to the SEC report, the investigation “is being conducted by Joseph Watkins, Laurie Abbott, and Mitchell Davidson of the Salt Lake Regional Office and Karaz Zaki of SEC Headquarters.”
The SEC issued the following recommendations to investors to detect fraud:
- High-yield claims with little to no risk.
- Non-registered investment professionals.
- Aggressive sales tactics.
- Problems with sales documents.
- No net worth or income requirements.
- “No one else seems to be involved.”
- Virtual or simulated offices.
- Unsolicited investment offers.
- Suspicious or unverified biographies of managers or promoters.
By Audy Castaneda
