US Securities and Exchange Commission Explodes Dignity's Crypto Fraud Scheme (DIG)

JAKARTA – The US Securities and Exchange Commission (SEC) recently uncovered a fraudulent scheme in cryptocurrencies. The US regulator accused two companies of being the perpetrators. According to the latest reports, both companies carried out a fake token promotion and managed to make more than 36 million US dollars.

According to a lawsuit filed on Friday (September 30, 2022), a Bermuda-based company called Arbitrade, and a Canadian company Cryptobontix named Troy Hogg, and their executives are suspected of carrying out a pump and dump scheme.

Cryptobontix founders and owners James Goldberg, Stephen Braveman, COO of Arbitrade, and Max Barber, the so-called international gold trader ran an alleged pump and dump scheme involving a cryptocurrency called Dignity (DIG) from 2017 to 2019, according to CryptoPotato.

As stated in the SEC complaint, Hogg hired a Russian developer in 2017 to create Dignity, a token developed on top of the Ethereum network. Crypto DIG is owned and controlled by Hogg and Cryptobontix. Coins began to be "traded exclusively" on Livecoin, a Russian crypto trading platform.

Both Arbitrade and Cryptobontix claim via an announcement that the former purchased and received $10 billion worth of gold bullion from SION, a company owned by Barber, with each of the three billion DIG tokens backed by $1 worth of gold.

The companies also claim that they get audit firms to audit gold as a way to increase investor confidence. However, the SEC alleges that the gold purchase and gold audit never took place, as it was a ploy to get investors to buy DIG tokens.

DIG Token Price Drops To Zero

The SEC also claims that Hog and Goldberg sold DIG on Livecoin at an "artificially inflated price", resulting in total proceeds of $36.8 million. Interestingly, DIG was removed from the Livecoin platform in February 2020 after the token value plummeted to zero.

As the lawsuit states, investors are participating in what they believe to be investment opportunities by providing their funds using bitcoin or other cryptocurrencies.

As a result, the SEC charged the defendants in this case with "violating the anti-fraud and securities registration provisions of the federal securities laws." In addition, the regulator's complaint is seeking repayment of illegally earned profits plus pre-prosecution interest, permanent damages, and civil monetary penalties.

Not only that, but US regulators are also suing the company's officers and directors for alleged fraudulent schemes.