The U.S. Securities and Exchange Commission is accusing a California man of fraudulently raising $3.6 million in Bitcoin from investors without producing the promised returns, ultimately funneling over $1 million of the money to his own use.
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In a California federal court, the SEC highlighted how Ryan Ginster defrauded investors through two separate ventures, Social Profimatic and MyMicroProfits.com, dating back to 2018.
According to the complaint, Ginster touted the platforms as high-yield investment opportunities but failed to follow through on his commitments. Social Profimatic promised returns of 8% a day, purportedly the funds were produced by fulfilling “social media marketing orders.” The agency claimed that instead, Ginster transferred the funds to various cryptocurrency wallets he owned and controlled, converting some of the Bitcoin to U.S. dollars for personal expenses.
“These transfers do not indicate that Ginster ever attempted to generate returns on the [bitcoin] through social media marketing orders as promised,” the complaint stated.
MyMicroProfits promised hourly returns, totaling over 3% per day, claiming the venture would invest in cloud hosting and cryptocurrency trading, however the funds were used by Ginster for the same fraudulent purposes.
Overall, Ginster converted $1 million worth of Bitcoin into U.S. dollars, using the funds to pay personal expenses such as taxes and his mortgage, but also for leisure purchases like a luxury car and to pay credit card bills.
Both offerings were investment contracts, but neither was registered with the SEC. The complaint also alleges investors were unable to withdraw their funds quickly and easily, as promised. Several individual investors claimed they were told their investment was growing, but funds were not available to withdraw.
“Ginster’s false and misleading statements to investors about [investors’] ability to withdraw their funds are material,” the complaint claims. “A reasonable investor would have considered it important to know that they could not withdraw their funds from either [Social Profimatic] or [MyMicroProfit] upon request.”
The SEC is seeking to bar Ginster from using any controlled entities to engage in the sale of unregistered securities and disgorgement of allegedly ill-gotten gains and civil penalties.
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