Cryptocurrency news

The court partially rejected SCO's claims against the CEO of GT Capital Investments

The court partially rejected SCO’s claims against the CEO of GT Capital Investments

The court relented in relation to the CEO of the mining company MGT Capital Investments, Robert Ladd (Robert Ladd), accused by the SEC of organizing a “pump and dump” scheme in the amount of $27 million.

District judge Edgardo Ramos said the U.S. securities and exchange Commission (SEC) did not provide substantial evidence of a violation of the securities act. He also rejected the SEC’s claims that Ladd concealed the presence of a small group of investors who shared 5% of the profits received from the company’s mining activities. The judge ruled that under current law, Ladd is not required to disclose information about participation in equity.

At the same time, the court agreed that the head of MGT could have known that a group of investors violated securities laws and published fabricated reports to promote the company’s shares. In addition, the fact that he misled many investors when he announced in may 2016 that John McAfee would take over as CEO of MGT also plays against Ladd.

In September 2018, the SEC accused Ladd of participating in the organization of the “pump and dump” scheme under the leadership of one of the largest shareholders of the Riot Blockchain, Barry Honig, and the former CEO of this firm, John O’rourke. The SEC alleges that they manipulated quotes from 2013 to 2018, deliberately inflating prices and leaving trusting investors “with virtual assets that have no value.” Honig never pleaded guilty, but in July he was suspended from trading small stocks.

Ladd said the SEC was “mixing” him with other defendants without clear evidence of his involvement in the scheme, selling shares at an inflated price and publishing fake information. The trial will continue, as the judge is inclined to believe that the CEO of MGT Capital Investments was an accomplice to the fraudulent scheme, but the court may reduce the penalties.

Recall that last month, the SEC filed a lawsuit against the mining company ESI for deceiving investors, partly related to fraudulent operations for the extraction of cryptocurrencies.