The Securities and Exchange Commission (SEC) recently achieved significant victories against two individuals involved in a cryptocurrency scam that defrauded investors of approximately $45 million. The U.S. Court for the Northern District of Illinois ruled in favor of the SEC, issuing final judgments against Arline Woodbury and Joyce Holverson for their roles in promoting a fictitious technology sale valued at billions of dollars.
According to the SEC's complaint, Woodbury and Holverson acted as downstream promoters for the CoinDeal scheme, raising over $3 million from investors. These investors were promised substantial returns from the imminent sale of confidential blockchain technology. The investigation into the scam, which occurred between 2019 and 2022, led to charges against several individuals, including the alleged mastermind, Neil Chandran.
Daniel Gregus, director of the SEC's Chicago office, emphasized the fraudulent nature of the scheme, stating that the defendants claimed access to valuable blockchain technology and promised investors extraordinary returns of up to 500,000 times their investment. However, he revealed that in reality, it was an elaborate scheme designed to enrich the defendants at the expense of tens of thousands of retail investors.
The court ordered Woodbury to pay disgorgement of $199,151, pre-judgment interest of $47,991, and civil penalties of $230,464. Holverson, on the other hand, was fined $164,308 in disgorgement, $25,778 in interest, and a $175,000 civil penalty. Litigation against the remaining eight defendants, including Chandran, is ongoing.