- The SEC is going after the Dignity scam from 2017 which earned its creators $36.8 million
- The agency accuses two companies and a range of individuals of lying to investors over the coin’s backing
- The companies behind the scam claimed that the DIG coins were backed by $10 billion in gold bullion
The Securities and Exchange Commission (SEC) has launched proceedings against two firms that made false claims and misrepresentations to investors, including that their tokens were backed by $10 billion in gold bullion. The scam, which bears a passing resemblance to Meta 1 in their reliance on a fake gold backing, netted the perpetrators over $36 million between 2017 and 2019, and the SEC wants the projects’ leaders to pay up.
No Dignity for Hogg, Braverman, Barber et al
The lawsuit, which was filed on Friday, charges Bermudan company Arbitrade and its COO Stephen Braveman, Canadian firm Cryptobontix and its founder Troy Hogg and two other individuals, one of which, Max Barber, ran an alleged pump and dump scheme involving the cryptocurrency Dignity (DIG) from 2017 to 2019.
The SEC claims that Hogg employed developers to create Dignity in 2017, an Ethereum-based token which was owned and controlled by Cryptobontix. Arbitrade claimed that the DIG token was backed by gold bullion worth $10 billion, a claim perpetuated by Cryptobontix, with each of the three billion DIG tokens backed by $1 worth of gold. However, like Meta 1, no evidence of any such purchase or holding was ever produced, leading to the SEC asserting that it was a scam.
DIG Failed to Resurface After Sham Listing
The two companies also claimed that its gold stash was audited as a way to boost investors’ confidence, another trick adopted by Meta 1, and another falsehood.
DIG started “trading exclusively” on Livecoin in June 2018, with Hogg and Goldberg selling their holdings at “artificially inflated prices,” resulting in total proceeds of $36.8 million, before the coin dropped like a stone. It was eventually delisted from Livecoin in February 2020, leaving holders with nowhere to turn:
The SEC is charging the defendants with “violating the antifraud and securities registration provisions of the federal securities laws”, and is demanding the $36.8 million to be repaid, prejudgment interest, permanent injunctive relief and civil monetary penalties.
