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SEC Moves to Freeze Assets of Alleged $12M Crypto Investment Scam


www.coindesk.com 06 June 2020 02:40, UTC
Reading time: ~2 m

The U.S. Securities and Exchange Commission (SEC) moved Friday to freeze the assets of a cryptocurrency mining and multilevel marketing scheme that it claimed bilked investors of $12 million.

Unsealing its complaint against Utah resident Daniel F. Putnam, his businesses MMT Distributions and R & D Global and associates Angel A. Rodriguez of Utah and Jean Paul Ramirez Rico of Colombia, the SEC claimed the three had lied to investors and misappropriated their funds.

The “Modern Money Team,” (MMT) as Putnam apparently called both businesses, invested in crypto mining equipment from at least July 2017 and eventually pivoted to offering investors “cryptocurrency trading packages” that would exploit crypto “arbitrage” opportunities at Bitfinex, according to the complaint, which was filed in the U.S District Court for the District of Utah.

Ramirez ran the crypto investments, Rodriguez was the liaison, and Putnam, a veteran of multilevel marketing, ran MMT.

Two hundred investors joined Putnam’s mining scheme, and MMT collectively raised $12 million from 2,000 investors in total, the SEC alleged. The SEC further alleged that MMT ceased paying out investors in Nov. 2019 but continued to raise funds through March 9 2020.

But the complaint said some of the money never went toward crypto mining equipment or digital asset investments. Instead, Putnam spent over $100,000 of his investors’ funds on a condominium and $33,000 buying a spa, according to the SEC.  

Ramirez controlled the Bitfinex account that Putnam told investors as recently as January 2020 held 260 bitcoin, according to the complaint. But the SEC alleged that the account never held more than 50, and that it was closed in May 2019. Ramirez had been periodically making ponzi-like payments to investors, the SEC alleged.

The SEC alleged that Putnam and Rodriguez knew “or were reckless in not knowing” that Ramirez was running a ponzi-like scheme based on Whatsapp communications. 

“We are either going to retire this year or go to jail,” Putnam texted to Rodriguez in February 2019, according to the SEC. “And Im [sic] still not sure any of it is real.”

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