Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC have all been charged by the Securities and Exchange Commission (SEC) for their involvement in the fraudulent crypto investment scheme CoinDeal. The scheme raised more than $45m from unregistered securities sales from more than 10,000 investors worldwide.

Allegedly, Chandran – the creator of CoinDeal – Davidson, Glaspie, Knott, and Mossel made investors believe that they could make huge returns by investing in the blockchain technology CoinDeal, which would later be sold for “trillions of dollars to a group of prominent and wealthy buyers”.

“We allege the defendants falsely claimed access to valuable blockchain technology and that the imminent sale of the technology would generate investment returns of more than 500,000 times for investors,” said Daniel Gregus, Director of the SEC’s Chicago Regional Office.

Luxury purchases

According to the complaint, between at least January 2019 to 2022, the group spread false and misleading statements to investors about CoinDeal’s value, involved parties, and the use of investment funds.

The complaint also states that no sale of CoinDeal ever occurred, and investors never got any distributions.

The group also allegedly used millions of dollars worth of investor funds for personal use, with Chandran alleged to have used the funds to buy cars, real estate, and a boat.

“As alleged in our complaint, in reality this was all just an elaborate scheme where the defendants enriched themselves while defrauding tens of thousands of retail investors,” Gregus said.

The SEC’s complaint, which was filed in the US District Court for the Eastern District of Michigan, charges:

• Chandran, Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with violating the antifraud and registration provisions of the Securities Act and Exchange Act; 
• Davidson, Glaspie, Knott, Banner Co-Op, and BannersGo with aiding and abetting certain of Chandran’s violations of the antifraud provisions of the Exchange Act; and
• Mossel and AEO Publishing with aiding and abetting Glaspie’s violations of the antifraud and registration provisions of the Securities Act and Exchange Act.

The complaint seeks disgorgement, pre-judgment interest, penalties, and permanent injunctions against all defendants, including officer and director bars against Chandran, Davidson, Glaspie, Knott, and Mossel. Chandran is also facing a conduct-based injunction.

Wire fraud

Chandran was also indited on three counts of wire fraud and two counts of monetary transaction for his involvement in CoinDeal by the US Department of Justice in June 2022. He faces up to 20 years in prison for each of the wire fraud counts, plus up to 10 years in prison for each count of engaging in unlawful monetary transactions if he’s convicted.

It is worth noting that there is a crypto exchange called CoinDeal that has nothing to do with these charges. The CoinDeal exchange states “some scammers have used our name to build some fraudulent scheme. […] Scammers built a fraudulent investment scheme (not an exchange!) using our band. We are happy that regulators work as they should and that scheme has been stopped, as crypto market needs transparency and trust.”