A cryptocurrency entrepreneur and his sister have been charged by US officials with crypto scam on Wednesday, accusing them of defrauding retail investors of millions of dollars using a bogus cryptocurrency.

The US Securities and Exchange Commission alleges in a statement Wednesday that John and JonAtina Barksdale scammed thousands of investors with Ormeus Coin.

According to the SEC, the siblings advertised Ormeus on cryptocurrency exchanges and promoted it on YouTube and at roadshows across the world.

Large-Scale Crypto Scam

The SEC alleges that John and “Tina” duped thousands of retail investors of more than $124 million through two unregistered securities offerings featuring the fake coin.

Additionally, the couple is charged with running Ormeus Global, a multi-level marketing program from June 2017 to April 2018 that offered subscription packages that included Ormeus.

“We claim that the Barksdales behaved as modern-day snake-oil salesmen, misrepresenting retail investors through social media, promotional websites, and in-person roadshows,” Melissa Hodgman, associate director in the SEC’s Division of Enforcement, said in a news release.

Bogus Investment

According to documents filed in federal court in Manhattan, the DOJ alleges that John misled about the value and profitability of Ormeus Coin’s mining assets, stating that the coin was backed by a $250 million crypto mining operation that earned more than $5 million in monthly revenue.

However, mining was suspended in 2019, much to the chagrin of investors who had already invested in the coin. The couple allegedly developed phony wallets in order to conceal the fact that Ormeus was not being mined.

BTC total market cap at $804.18 billion in the daily chart | Source: TradingView.com

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The crypto company allegedly deceived investors by claiming its vault wallet was worth more more $190 million in November of last year.

The display, however, was purportedly created using a second website that displayed the value of an unconnected wallet.

According to the SEC, the project’s actual wallets were “worth less than $500,000.”

The Barksdales’ attorneys could not be immediately named.

Going After The Bad Guys

“We will continue to vigorously pursue individuals who sell securities in schemes to dupe the investing public, no matter what label the promoters attach to their products,” Hodgman said.

The Justice department said John has been detained and faces up to 65 years in prison on securities fraud, wire fraud, and conspiracy charges.

Both defendants are US nationals, with John, 41, having resided in Thailand and Tina, 45, in Hong Kong, the SEC disclosed.

SEC Is Growing Uneasy

The SEC has been skeptical of widespread crypto sector promotional practices and whether they represent securities fraud.

Last week, reports surfaced that the SEC has locked down its crosshairs on NFTs used for fundraising reasons “like ordinary stocks.”

Meanwhile, the price of Bitcoin (BTC) was at $42,324.87 on Coingecko as of this writing.

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Featured image from PYMNTS.com, chart from TradingView.com