United States’ SEC busts Ponzi scheme utilizing diamond-backed cryptocurrency
May 24, 2019
The United States’ Securities and Exchange Commission in Florida has taken strict actions to terminate the recent Ponzi scheme that involved $30 million worth of diamond-backed cryptocurrency, Argyle Coin which targeted nearly 300 investors.
The diamond-backed cryptocurrency business revolved around buying and selling of raw diamonds.Argyle Coin was unique due to its offerings. The main purpose was to ease the process of smart contracts for enhancing the speed of online transactions of colored diamonds. It assured partial ownership of expensive colored diamonds. Argyle Coin was tangible that is, offering colored diamonds worth millions.
The Securities and Exchange Commission [SEC] stated that the Palm Beach-based company enticed people by offering investment schemes that were promoted by diamonds in the year 2014. The mastermind behind the Ponzi Scheme, Jose Angel Aman, principal of Argyle Coin LLC, deceived investors and used their money to carry out the scheme.
The SEC also imposed a ban on Natural Diamonds Investment Co. and Eagle Financial Diamond Group as they were found to unlawfully support Argyle Coin. Harold Seigel and Jonathan Seigel, promoters of Natural Diamonds Investment Co. and Eagle Financial Diamond Group, were also charged with supporting the two companies and backing the Ponzi scheme.
The Federal court in Florida authorized the Commission to freeze the capital assets of defaulters and sanctioned its request to restrict operations of the company temporarily.
Counsel for the Seigels issued a joint statement saying,
“They, themselves, have personally been wrongfully accused; vehemently denying the allegations lodged against them, refuting any contention they participated in a Ponzi scheme or otherwise misled their friends, family and long standing clients in any way.”
An official statement released about Argyle Coin revealed how Aman started the scheme way back in 2014 and invited prospective investors to invest in Natural Diamonds. Aman promised investors that he would use the funds to gather, cut and furbish raw diamonds under the name of “fancy colored diamonds”. The scheme promised to deliver 24 percent of invested money and full return of investment within a span of two years.
Further, they provided Eagle Financial Diamond Group’s investment contracts to investors and promised to build a cryptocurrency entirely backed by diamonds, adding that it was risk-proof.
However, the Commission gathered evidence to prove that there were no diamonds and that the funds were wrongfully used to compensate investors of previous companies – Natural Diamonds Investment Co. and Eagle Financial Diamond Group. The victims of the financial fraud were misguided as Aman inappropriately used $10 million worth of funds to fuel his company and pay his personal expenses.
In the final charge sheet, the SEC charged the owners on a misconduct charge and banned the companies for committing crimes in violation of federal security laws, also charging them under anti-fraud provisions.