SEC sues 38 crypto firms over fabricated registration certificates

The US Securities and Exchange Commission has requested a federal court to issue injunctions against several crypto investment advisory firms that allegedly used fake SEC certificates, a move announced yesterday.

The regulator filed 38 civil complaints against crypto operators including CryptoOrbit, Ftaexchange, Pinnacle, Quantum, RBH and others, accusing them of submitting false filings to appear legitimate.

Crypto-focused Quantum Financial Institute, for instance, purported to hold registered investment advisor status that was never granted, according to the SEC.

The company issued a press release promoting “a multi-dimensional intelligent investment system” and “courses” teaching topics such as “bitcoin giveaways” and “the highest win-rate strategies, helping students understand the deep logic of the market.”

It also created a counterfeit SEC certificate to deceive customers, the SEC alleged.

Today, the SEC charged 38 entities alleging that they feigned legitimacy as U.S. advisers through false filings to lure retail investors.

Commissioners are seeking court orders for civil penalties and to revoke the defendants’ reporting exemption privileges in future advisory submissions.

At the direction of the SEC, FINRA has already removed non-compliant forms for these advisors from adviserinfo.sec.gov.

RBH Infinity Exchange Inc, Pinnacle Crypto Exchange Inc, THEVGPRO Ltd, Quantum Financial Institute Ltd, Ftaexchange Ltd and other crypto firms now face US civil lawsuits.

SEC sues unregistered crypto advisors

Third-party promotional articles about some of these crypto businesses falsely stated they held valid SEC registration numbers that exactly match those cited in yesterday’s enforcement action.

Pinnacle marketed crypto swaps and its compliance with US regulators. THEVGPRO promoted a Bitcoin-backed “settlement security fund, enhancing global liquidity and payment efficiency” using registration numbers never approved by the SEC.

The SEC alleges these entities made materially false statements on Form ADV and failed to file required disclosures.

Commissioners claim violations of Sections 204(a) and 207 of the Investment Advisers Act. No investor losses have been quantified in the initial complaints.

SEC staff tried to contact many crypto advisors making false claims, but several phone numbers were disconnected or belonged to unrelated businesses, and postal mail was returned undeliverable.

Disconnected phones, undeliverable addresses

Several unregistered investment advisors claimed to operate from Colorado while consistently using Hong Kong IP addresses, according to the SEC.

Apexium Securities Ltd allegedly used Hong Kong connections while listing a Colorado office where it had no actual presence.

Web3 University, another unregistered crypto operator, is accused of accessing FINRA’s filing system from the People’s Republic of China. It also used a disconnected phone number and listed an undeliverable Colorado Springs office.

CryptoOrbit, also sued yesterday, claimed to possess SEC certificates that commissioners never issued.

An Ftaexchange press release promoted digital asset trading and custody services with fake SEC registered investment adviser status, implying it was in good standing.

RBH issued a press release announcing three health and intellectual-property-themed crypto tokens that are now worthless. It urged readers to “invest in the future — act now.”

Pinnacle Crypto Exchange claimed it had completed SEC registration when it had not, according to the SEC.

Absolutaris Base Limited was also named as a defendant in yesterday’s SEC action.

The Better Business Bureau recorded consumer complaints about that service, including worthless stock signals, a fake trading app, and advertisements promising unsustainable monthly returns of 20-60%.