“Diamond-backed” Argyle Coin ICO Gets SEC Treatment

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Argyle Coin, the token that claimed to use blockchain technology to operate an “online marketplace to finance, trade, and pay for valuable diamonds” has been halted by the Securities and Exchange Commission (SEC) who have accused the operators of running a Ponzi scheme. The emergency order to bring an end to the scheme was authorized last week by a judge in the U.S. District Court for the Southern District of Florida, with the SEC stating that 300+ U.S. and Canadian investors were unwitting participants.

Third Time Lucky

The SEC claims that Argyle principal Jose Angel Aman used the cryptocurrency as a continuation of a scheme he initially orchestrated with two other companies he owns – Natural Diamonds Investment Co. and Eagle Financial Diamond Group Inc – in which he promised investors he would buy whole diamonds which he would then cut down and sell on for a higher price. This would have been enough to get Aman charged with offering an unregistered security, but the SEC’s main complaint is that he was using funds raised by the Argyle ICO, which ended in November last year, to pay off investors from the other two companies, as well as funding his lavish lifestyle. To achieve this the trio falsely claimed Argyle was risk-free because it was backed by fancy colored diamonds and promised to use investor funds to develop the cryptocurrency business.

Red Flags all Round

As anyone who knows anything about Ponzi schemes would tell you, the words “guaranteed return” or “risk-free investment” should have potential investors running for the hills, but these scammers always manage to find new blood somewhere. And even in a crypto bear market, there are still naive investors who are susceptible to the promise of guaranteed wealth, which some of course argue is how Bitcoin was able to reach $20k in 2017, an argument that simply doesn’t hold water.