SEC goes after Digital World Trade, founder Alexander Elbanna

The Securities and Trade Fee (SEC) has filed a criticism towards Alexander Elbanna, Digital World Trade, LLC (“DWE LLC”), BoostedPro, LLC, and D.W. Trade, LLC (“DWE LLC II”).

The regulator alleges that, between roughly February 2018 and April 2021, Alexander Elbanna and three entities that he based, owned, and promoted in brief succession, DWE LLC, BoostedPro LLC, and DWE LLC II, carried out unregistered presents and gross sales of newly created in-house alternate tokens or crypto asset securities referred to as “DWE” and “BPC.”

The defendants perpetrated a fraudulent scheme via three nominally separate enterprises to illegally elevate over a million {dollars} in proceeds via the unregistered presents and gross sales of those securities to crypto asset traders.

Every of the Defendants’ enterprises had an related crypto asset created in restricted provide that Elbanna and the related entity supplied and offered to traders. In rinse and repeat trend, the primary enterprise was shut down because the second started, and so forth, till all three had been began and ended within the span of three years.

Along with the crypto property they supplied on the market, every enterprise additionally concerned an precise or promised crypto asset buying and selling platform that proposed to match, and in a single case did match, consumers and sellers of crypto property. Every enterprise additionally promised to develop its personal market through which customers might purchase items and providers with crypto property.

Buyers had been led to imagine that the worth of their investments in DWE and BPC was tied to the success of the associated buying and selling platform and anticipated market, each of which had been purportedly a part of the enterprise through which they had been investing. Buyers relied solely on the efforts of Elbanna and his entities to deliver these ventures to fruition in order that they could notice a return on their funding. Defendants by no means efficiently did so.

When one enterprise was shut down, Elbanna and the subsequent entity supplied traders the “alternative” to swap the crypto asset that they had bought within the earlier enterprise for the crypto asset related to the subsequent, and inspired them to speculate additional. Elbanna and his entities thus repeatedly focused the identical group of weak traders, along with most of the people.

As soon as Elbanna shut down his third enterprise, traders in all the related crypto property offered by Defendants misplaced all or practically all the funds that they had invested, a lot of which Elbanna misappropriated.

Defendants solicited traders in these securities via quite a few materials misrepresentations, together with false claims relating to Elbanna’s private wealth, expertise, {and professional} expertise, and false assurances that each funding was totally backed by gold, silver, or bitcoin (“BTC”) collateral. Defendants undertook these fraudulent presents and gross sales of DWE and BPC, which had been supplied and offered as funding contracts and due to this fact as “securities,” with out registering them with the SEC.

Elbanna additionally used the identical misrepresentations to fraudulently solicit traders to buy fairness shares in DWE LLC. He misappropriated a lot of the proceeds from these gross sales as effectively.

By partaking within the conduct alleged on this Criticism, Defendants violated, and until restrained and enjoined, will proceed to violate Part 5(a) and (c) of the Securities Act of 1933 [15 U.S.C. § 77e(a) and (c)] (“Securities Act”), Part 10(b) of the Securities and Trade Act of 1934 [15 U.S.C. § 78j(b)] (“Trade Act”) and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Part 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

By this Criticism, the SEC seeks: (a) everlasting injunctive reduction, disgorgement of ill-gotten beneficial properties plus prejudgment curiosity, and civil penalties towards every of the Defendants on this motion; (b) an officer and director bar towards Defendant Elbanna; (c) a conduct-based injunction prohibiting all Defendants from taking part, straight or not directly, in any securities providing; supplied, nonetheless, that such injunction shall not forestall Defendant Elbanna from buying or promoting securities apart from DWE and BPC cash or tokens, for his personal private account; (d) disgorgement of ill-gotten beneficial properties towards Aid Defendant Angela Elbanna; and (e) every other and additional reduction the Courtroom could deem simply and correct.