The U.S. Securities and Exchange Commission announced Friday that it has halted an alleged cryptocurrency scam and frozen related assets. In a press release, the commission confirmed that one of the accused fraudsters is a former Washington state senator, David Schmidt.
According to the SEC, Schmidt and two Florida residents – Nicole Bowdler and Robert Dunlap – sold a “purported digital asset” dubbed Meta 1 Coin. The SEC has alleged that the three defendants misrepresented the coin to investors. Those misrepresentations included falsely claiming that the coins were backed by either a $1 billion collection of art or $2 billion of gold that was supposedly audited by an accounting firm.
In addition, the trio reportedly marketed the coin as a “risk-free” investment that would never drop in value. Instead, they claimed that it would provide guaranteed returns as high as 224,923 percent. Moreover, they never even distributed the coins.
The complaint alleges that they did, however, use investor money to pay bills, purchase luxury cars, and funnel funds to another individual and company. The SEC claims that the trio used the alleged scam to defraud more than 150 investors of more than $4.3 million.
The SEC has charged all three with violating provisions of the federal securities laws and has asked for permanent injunctions, repayment of all funds received as a result of the scam, and civil penalties. SCE Fort Worth Regional Office Director David Peavler urged investors to be skeptical of investment opportunities that sound too good to be true:
“As we allege, the defendants made audacious claims about the Meta 1 Coin and would say almost anything to separate investors from their money. Investors should always look skeptically at promoters who claim that their investment cannot lose value or that investors will receive massive returns.”