Skip to main content

SEC Files Fraud Suit Against Bitcoin Startup Owner

The US Securities and Exchange Commission has filed fraud charges against a UK citizen accused of bilking the investors of a bitcoin startup.
According to court documents filed today, the SEC accused Renwick Haddow of misleading stakeholders who bought into two companies he founded: Bitcoin Shop Inc., which was advertised as a platform for trading bitcoin, and Bar Works, a co-working space company akin to WeWork. Concurrently, the US Attorney's Office for the Southern District of New York is also pressing charges against Haddow.
The SEC alleged that Haddow, who resides in New York, misrepresented key factors about the company's operation and the background of senior executives of Bitcoin Store Inc. who, according to the statement, "do not appear to exist" in an attempt to to allure potential investors.
Haddow – who the SEC said created a broker-dealer firm, called InCrowd Equity, without registering with the agency – was further accused of diverting funds raised from investors to bank accounts held outside of the country.
The SEC said today in a release:
"Haddow allegedly diverted more than 80 percent of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco."
In court documents, the SEC noted that Haddow had previously received an eight-year disqualification in the UK from working as the director of a company, a ban stemming from his involvement with a firm called Branded Leisure plc.
The SEC also alleged that fake identities were employed by the accused firms. The court documents noted that the CEO of the startup is named Gordon Phillips, who appeared in promotional videos for the service. According to a LinkedIn page, the profiled person used to work for HSBC in London and Hong Kong, as well as Deutsche Bank.
Yet the agency alleged that Gordon Phillips "never worked for HSBC or Deutsche Bank" and it believes the name is a fictitious one.
Earlier this month, New York business publication Crain's reported on the collapse of Bar Works, noting that the firm is the subject of an investigation by the Federal Bureau of Investigation as well as two investor-led lawsuits. A report in January, from The Real Deal, first suggested that fake identities were employed.
The website www.bitcoinstore.global appears to be connected to the scheme. A press release published on the site in July 2015 showed that Bitcoin Store Inc., the exact name of the entity charged by the SEC, was trying to issue a convertible promissory notes with a coupon of 8% per annum in order to raise $1.825 million.

Comments

Post a Comment

Popular posts from this blog

Case-By-Case or Cease-and-Desist? In Search Of a New Approach to ICOs

That rumble you hear is the sound of regulators around the world mobilizing resources to tackle the pressing matter of token sales. Yet, in spite of the spectacular growth of blockchain token-based funding, no one seems to have a clear idea of what type of rules to introduce. The resulting uncertainty (not to mention ridicule) is left hindering progress as money flows to unviable projects and investors are left vulnerable to foul play – exactly what regulation is supposed to prevent. Perhaps a new approach is needed. But to see where this could go, it's worth stepping back and asking what we expect the regulation to do. Safety belt First, why do we need regulation, not just of finance, but of anything at all? To protect us. At its roots, that is the main role of government – to protect its citizens from avoidable harm and extreme loss brought about by others or from our own lack of common sense. When it comes to securities, that usually means stopping us from making poor decisions…
Post a Comment
Read more

Frequently asked questions about Bitcoin

What is Bitcoin? Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping systemin existence. Who created Bitcoin? Bitcoin is the first implementation of a concept called crypto-currency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010 without revealing much about himself. The community has since grown exponentially with many developers w…
Post a Comment
Read more

Is Bitcoin Legal?

Bitcoin is of interest to law enforcement agencies, tax authorities, and legal regulators, all of which are trying to understand how the cryptocurrency fits into existing frameworks. The legality of your bitcoin activities will depend on who you are, where you live, and what you are doing with it. Bitcoin has proven to be a contentious issue for regulators and law enforcers, both of which have targeted the digital currency in an attempt to control its use. We are still early on in the game, and many legal authorities are still struggling to understand the cryptocurrency, let alone make laws around it. Amid all this uncertainty, one question stands out: is bitcoin legal? The answer is, yes, depending on what you’re doing with it. Read on for our guide to the complex legal landscape surrounding bitcoin. Most of the discussion concerns the US, where many of the legal dramas are currently playing out. Alternatively, you can access our comprehensive Regulation Report for worldwide expert …
Post a Comment
Read more