The U.S. Securities and Exchange Commission filed a civil suit on Friday against Boaz Manor, business partner Edith Pardo and two companies in connection with an allegedly fraudulent ICO that raised $30 million.
In a separate action, the U.S. Attorney's Office for the District of New Jersey filed a criminal lawsuit against both Manor and Pardo. Both were charged with "one count of conspiring to commit wire fraud, three counts of wire fraud, and one count of securities fraud in connection with a blockchain technology company," according to the office's statement.
Blockchain Terminal was pitched as a kind of Bloomberg Terminal for cryptocurrencies, as The Block detailed in an investigative report published in December 2018. But the investigation revealed "Shaun MacDonald," who was pitching the token-based project to hedge funds and other investors, was an alias intended to conceal Manor's true identity and his role in the collapse of the Canadian firm Portus Alternative Asset Management. Manor served a year in prison after pleading guilty to charges in connection with Portus's fall, as noted in the SEC statement.
According to the regulator, "the complaint alleges that the defendants claimed to have 20 hedge funds testing technology to record transactions on a distributed ledger or blockchain. In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it."
This account reflects some of The Block's findings at the time, as hedge funds attested to receiving free versions of the terminal.
In addition to Manor, the SEC named Edith Pardo, CG Blockchain Inc. and BCT Inc. SEZC as defendants.
According to the U.S. Attorney's Office statement, Pardo was arrested Friday by the Federal Bureau of Investigation while Manor remains at large. Both face possible decades-long jail sentences if convicted, per the statement.
“Learning about the identity and background of the individual or individuals behind a venture is one of the first things we tell investors to do before trusting anyone with their money,” Joseph G. Sansone, head of the SEC’s Market Abuse Unit, said in a statement. “As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed defendants to take over $30 million from investors’ pockets.”