SEC Charges Adam Brothers With $60 Million Crypto Ponzi Scheme

On Monday, August 26, 2024, the Securities and Exchange Commission announced that it had filed a complaint in federal court charging brothers Jonathan and Tanner Adam of running a $60 million Ponzi scheme that defrauded over 80 investors nationwide.

According to the SEC’s complaint, from January 2023 to June 2024, Jonathan and Tanner Adam solicited victims to invest in their companies GCZ Global LLC and Triten Financial Group LLC with promises of monthly returns as high as 13.5 percent. The brothers falsely claimed that Jonathan had created a trading “bot” that used arbitrage opportunities on cryptocurrency platforms to fund high-yield “flash loans” through a lending pool. They told investors their money would be used this way and that only a global market crash could lose them their funds.

However, the SEC alleges this lending pool did not actually exist. Instead of trading activities, the Adam brothers used millions from new investors to pay supposed returns to earlier investors in a Ponzi-like manner. They also used the money to finance lavish lifestyles, with Tanner allegedly spending funds on a $30 million Miami condo and Jonathan purchasing over $480,000 worth of vehicles.

Additionally, the SEC states that Jonathan misrepresented his background and failed to disclose a past conviction for three counts of securities fraud.

The complaint charged all parties with federal securities fraud. According to the SEC, it obtained emergency asset freezes against the Adam brothers. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.

“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” said Justin C. Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office. “The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors.”