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SEC’s Latest Target For Crypto Pump-Dump Scheme

The U.S. SEC has brought charges against Arbitrade Ltd., based in Bermuda, and Cryptobontix, based in Canada, as well as their principals, for allegedly being part of the involving a crypto asset known as “Dignity” or “DIG.”

Arbitrade Ltd., Cryptobontix Inc., and their founders, namely Stephen L. Braverman, Troy R. J. Hogg, and James L. Goldberg, are the subjects of the SEC filing due to the pump-and-dump scheme’s involvement.

The so-called international gold marketeer and founder of SION Trading, FZE Max W. Barber, was named as a relief defendant in the filing.

Both agencies carried out a conjoint investigation into the concerned companies’ business practices. The executives of the company were also the subjects of the studies.

10 Bullion Gold Acquisition? How True Is It? 

Arbitrade and Cryptobonix executives, according to the SEC’s press release, made untrue statements regarding Arbitrade’s business activities.

The organization claimed to have acquired 10 billion dollars worth of gold from May 2018 until January 2019. The business also promoted the Dignity token, claiming that each token was backed by $1 in gold.

Independent accounting firms are said to have audited the gold peg claims. In addition, Arbitrade claimed that Max W. Barber assisted in acquiring the gold bullion. According to the SEC (Securities and Exchange Commission), Barber runs his own business, SION Trading FZE, and claims to be an international gold marketeer.

In addition, the authorities asserted that the gold never existed and that the whole thing was a tactic to hype the DIG’s sale and drive up the price of DIG. DIG was eventually sold to unsuspecting investors for 36.8 million dollars by the executives.

Alice Sum oversees the SEC litigation, which Teresa Verges oversees. The accused are being accused of breaking the 1934’s Securities Exchange Act and the Securities Act of 1933.

In addition to added civil fines, the watchdog requests that they repay all profits from the alleged scheme. In addition, the four men face a director bar and an officer from the commission.

OSC’s Take On The Issue

The OSC’s fraud charges marked a somewhat different transaction history and timeline. According to their press release, the companies engaged in the aforementioned false advertising campaign. In addition, the fundraising began in June 2019 and May 2017. Additionally, an allegation statement was made available.

Arbitrade and Cryptobonix, according to the Canadian agency, raised $51 million through their DIG offerings. However, the regulator also noted that two businesses did not submit a prospectus for the sale of DIG.

The organizations then engaged in trading without registering themselves. Additionally, the OSC stated that the companies’ executives misappropriated the funds raised by the DIG offering.

They used the money for things that had nothing to do with the company’s business.

In addition, the funds were used to pay the companies’ superintend by one of the executives and invest in real estate.

Is It Winter For DIG?

Additionally, the SEC stated that Hog and Goldberg sold DIG at artificially inflated prices, netting $36.8 million in proceeds. After the token’s value fell to zero in February 2020, it was removed from the Livecoin platform.

The cryptocurrency Dignity (DIG) runs on the Ethereum platform. Dignity currently has a supply of 3,000,000,000 and is in circulation with 523,036,420.542. Dignity is presently trading at 0.00001 USD, up 0.00 in the last 24 hours.

Investors have never had a lot of faith in either this asset or the bold claims made by the businesses under investigation. Additionally, none of the reputable exchanges carry the asset.

The complaint asks the court to order the defendants to forfeit their profits, pay a civil penalty, and place individual defendants on officer-and-director bars.

Will The Price Hit Bottom Or Bounce Back: Our Analytical View

According to the current price prediction, dignity’s current price is predicted to rise by 0.00% to $3.00 on October 10, 2022.

Their technical indicators indicate the current mood is bearish, and the Fear & Greed Index is at 25. This shows extreme fear. 

Dignity’s price volatility over the past 30 days was 301.46%, with 24/30 (80%) green days. Therefore, our Dignity Gold forecast indicates that now is not a good time to purchase Dignity Gold.

One method for predicting the Dignity price over the long term is to compare it to other significant technological innovations and trends.

The Demand Of Regulators

The SEC and the OSC have requested that the relevant courts in their respective jurisdictions order the businesses mentioned above to cease operations.

In addition, regulators demanded that the accused executives be barred from holding similar positions and that all funds raised through the sale of DIG be returned to their investors.

Since then, most crypto projects have been regulated by the SEC because they are considered securities. Additionally, the report mentions that the SEC wants to become the primary regulator of cryptocurrencies, a possibility that many in the crypto industry are not excited about.

All defendants are subject to civil penalties, permanent injunctive relief, disgorgement with prejudgment interest, and officer-and-director bars in the complaint.

Pump-Dump Or Another Controversy?

In a pump and dump scheme, fraudsters spread false information to induce a buying trend that will increase or “pump up” the price of a stock and then decrease or “dump” the shares of the stock by selling their shares at the inflated price. Investors typically lose money when the fraudsters sell their shares and stop promoting the stock. 

Social media, investment research websites, investment newsletters, online advertisements, email, Internet chat rooms, direct mail, newspapers, magazines, and Radio spreads false or misleading information about a company’s stock price. 

Since there is typically a limited amount of information available to the public regarding microcap companies, these businesses are particularly susceptible to pump-and-dump schemes. Besides, it’s too early to be on the side of judging any of these institutions. 

We suggest you follow the trial of the news before reaching any conclusion.

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