SEC charges brothers with $60M crypto Ponzi scheme

The Securities and Exchange Commission obtained emergency asset freezes against two brothers, Jonathan Adam and Tanner Adam, and their respective entities, GCZ Global LLC and Triten Financial Group LLC, to halt an alleged $61.5 million cryptocurrency Ponzi scheme.

The SEC alleges that from January 2023 to June 2024, the Adam brothers solicited and lured more than 80 investors across the country by promising 13.5% monthly investment returns. The duo told investors that Jonathan Adam had created an automated software "bot" that could identify arbitrage trading opportunities on a crypto trading platform and enter into "smart contracts;" then investor funds would be used in a lending pool that would fund "flash loans" to complete these trades, according to the complaint. The brothers allegedly told investors that their funds were safe. 

In reality, the described lending pool did not exist, and the brothers instead used millions of dollars to pay supposed returns to existing investors and to support their lavish lifestyles, the SEC alleges. Jonathan Adam, for instance, used at least $480,000 of investor funds to purchase cars, trucks and recreational vehicles, and Tanner Adam used investor funds to build a $30 million condominium in Miami where he resides, according to the complaint.

"As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes," Justin Jeffries, associate director of enforcement in the SEC's Atlanta Regional Office, said in a statement. "The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors."

Jonathan Adam did not immediately respond to request for comment. Tanner Adam could not be reached for comment.

The complaint, filed on Aug. 26 in the U.S. District Court for the Northern District of Georgia, charges Jonathan Adam, Tanner Adam, GCZ Global LLC and Triten Financial Group LLC with violating antifraud provisions of the federal securities laws. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgement interest and civil penalties against the defendants.