NY Court Issues Judgment Against Edelman Blockchain Advisors in $4M Crypto Fraud Case

On Thursday, April 11, 2024, the United States District Court for the Southern District of New York issued a judgment ordering disgorgement and financial penalties against Edelman Blockchain Advisors LLC, a company accused of securities fraud in connection with an alleged cryptocurrency scam.

According to court documents, the Securities and Exchange Commission (SEC) filed a complaint in September 2022 against Gabriel Edelman, Creative Advancement LLC, and Edelman Blockchain Advisors LLC. The SEC alleged that between 2017 and 2021, the defendants raised approximately $4.3 million from investors by falsely claiming the funds would be invested in digital assets like bitcoin. However, Edelman allegedly only invested a small portion of the money in cryptocurrencies and blockchain projects as promised, while using much of the investor funds for his own personal expenses instead.

As part of the alleged fraud, Edelman was also accused of making early repayments to some investors in order to encourage further investments, employing a classic Ponzi scheme technique. The SEC complaint charged the defendants with securities fraud violations, asserting they made untrue statements of material fact and omitted key details necessary for investors to make informed decisions.

Edelman Blockchain Advisors LLC consented to the judgment. In its ruling, the court formally accepted the consent from Edelman Blockchain Advisors LLC and permanently barred the company from future violations of securities laws.

The judgment also allows the court to later determine appropriate monetary penalties, including disgorgement of ill-gotten gains plus prejudgment interest. Edelman Blockchain Advisors LLC will not be able to contest liability or the validity of the SEC’s allegations in future proceedings over monetary relief. Additionally, the ruling retains jurisdiction to enforce the terms of the judgment.

The SEC alleged that the fraudulent scheme spanned several years and involved four investors, raising significant sums by exploiting excitement over the emerging cryptocurrency and blockchain sector. The judgment imposes restrictions and sets the stage for Edelman Blockchain Advisors LLC to potentially face millions in financial penalties and restitution as a result of the declared securities violations.

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