SEC charges crypto scammer who raised $3.5m from investors

By Yana Berman

Donald G. Blakstad allegedly raised money for the mining operations but used them as an own piggybank

                                

The US Securities and Exchange Commission (SEC) has filed a complaint against Donald G. Blakstad who allegedly raised around $3.5m (£2.7m, €3.1m) from investors for his personal needs.

According to the complaint, Blakstad raised the funds from at least 14 investors, using three of his companies including a purported crypto mining operator.

The mining company called Energy Sources International Corporation was funded in 2015 in the US state of Nevada. Blakstad was its founder, president and purportedly the only employee.

The SEC claims that the owner of the company sold securities in the company worth around $550,000 to several investors. He further spent $270,000 of them for his personal needs and then returned $60,000 to the investors as profits despite the fact that the business never got profitable.

The alleged scammer told investors that he would use the money to cover the start-up costs, along with purchasing some equipment for mining operations.

However, Blakstad reportedly used the funds for his own needs. Some money were transferred to the person who connected the scammer with his investors.

In case Blackstad is found guilty, he will be obliged to return all the funds to the investors, as well as pay some civil penalties. The SEC will also prohibit him to occupy any leading positions in the businesses or work with securities.

Just a few days ago, the DEC outlined its crypto priorities for 2020. The regulator stressed the risk posed by unregulated initial coin offerings (ICOs) and the need to safeguard investors from fraud.

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FURTHER READING: SEC outlines crypto priorities for 2020

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