In the latest law enforcement practice, the Foreign Securities and Exchange Commission targeted an investment consultant and a person suspected of being involved in a $100 million encrypted currency fraud.

SEC filed an emergency lawsuit against investment consultant BKCoin and one of the responsible persons, Kevin Kang, on Feb. 23, accusing them of "ignoring the structure of equity funds, mixing investor assets and paying investors more than $3.6 million for a Ponzi scheme," according to a public statement on March 6. According to the civil complaint from the financial regulator, BKCoin raised about $100m from investors to encrypt the project, but Recreation misappropriated some of the money for its main use-including leisure vacations, tickets to sporting events and an apartment.

Eric Basti, director of the Miami Regional Office of SEC, said: "as pointed out, investors hand over the money to the defendant to buy and sell encrypted assets." In turn, the defendant committed the crime of embezzlement of funds, making fake documents, and even engaging in a Ponzi scheme. This behavior shows our renewed focus on protecting investors and completely eliminating fraud in all financial sectors, including the encrypted assets industry. "

SEC's charges are aimed at newly released law enforcement actions by companies or individuals involved in encryption, accusing them of violating the risk control system provisions of the federal securities law. According to regulators, SEC is looking for civil penalties for returning BKCoin and Kang, distinguishing between liquidated damages and interest, as well as a permanent injunction against each other.

Many in this field accuse the current chairman, Gamo Gensler, of labeling some encrypted assets as securities based on law enforcement rather than the court system. Gensler's leading cadres are promoting a series of anti-encryption behaviors with SEC. Binance, a password trading center, tried to hire Gensler as a consultant in 2018 and 2019 before he was elected chairman of SEC, the Wall Street Journal reported on March 5.