Michigan Judge Allows Government Intervention, Stays Discovery in SEC’s Crypto Lawsuit Against CoinDeal

News | June 6, 2024 By:

On Thursday, May 23, 2024, Michigan Federal Judge Shalina D. Kumar granted motions that could advance legal proceedings against individuals accused of running an alleged $45 million cryptocurrency investment fraud scheme.

Judge Kumar approved the U.S. Department of Justice’s request to intervene and stay discovery in a civil case brought by the U.S. Securities and Exchange Commission (SEC) against CoinDeal executives Neil Chandran, Amy Mossel, and others. She agreed with DOJ arguments that a discovery stay would prevent prejudice to the ongoing criminal case against Chandran in Nebraska and protect the Fifth Amendment rights of defendants by preventing depositions in the civil matter.

The judge also granted SEC motions for default judgment against two defendants, Garry Davidson, and Linda Knott, who have not appeared in the civil lawsuit to defend themselves. SEC counsel Michael Foster told the court his agency will seek similar default judgments against Chandran and Michael Glaspie without any discovery.

As the criminal case in Nebraska moves forward, the DOJ expects Neil Chandran to stand trial by the end of 2024 or early 2025 on charges of wire fraud and conspiracy related to CoinDeal. In October 2022, Glaspie pled guilty to one wire fraud count and was sentenced to over 5 years in federal prison for his role in misappropriating $5.9 million from CoinDeal investors.

The SEC accuses Chandran, Mossel, and others of running CoinDeal as an elaborate fraud that raised more than $45 million from unsophisticated investors between 2019 and 2022 by falsely promoting the company’s novel blockchain technology and an imminent multi-trillion dollar sale. According to the complaint, there was never a real technology or acquisition, and investor funds were instead used by Chandran and others for luxury vehicles, real estate properties, and other personal expenses.

While Mossel objected to delaying discovery in the civil case, Judge Kumar found that resolving the criminal charges could expedite the SEC lawsuit. The ruling allows legal proceedings to move forward against Chandran and others accused of perpetrating a complex cryptocurrency investment scam that exploited public enthusiasm for emerging technologies like blockchain.

Please contact BlockTribune for access to a copy of this filing.