The two fraudsters, Boaz Manor (pictured above) and Edith Pardo, have been charged with misappropriating investor funds.
The pair stand accused of embezzling $30 million through a fraudulent initial coin offering. Manor and Pardo ran two fraudulent companies, CG Blockchain Inc and BCT Inc, which the SEC claims were used to steal funds from hundreds of investors.
From August 2017 to September 2018, the pair marketed digital asset securities under the guise of providing technology for hedge fund operators.
Despite the claims of 20 hedge fund partners and paying customers, the pair actually produced a barely-functional prototype – but it attracted no interest from users. The tokens the pair sold were effectively worthless.
The SEC is now seeking the disgorgement of the ill-gotten gains, with interest, and further public penalties against the two fraudsters.
In a strange twist, SEC prosecutors claim that Toronto resident Manor dyed his hair dark and grew his beard out in an attempt to mask his true identity.
He then masqueraded as one of Pardo’s employees under the fake name Shaun MacDonald.
Manor was previously convicted, and served time, for his role in the collapse of a large Canadian hedge fund.
SEC prosecutors have claimed that given his history of financial crime, he almost certainly wouldn’t have attracted investment.
Manor is said to have deprived ICO investors from essential information which may have otherwise dissuaded them from investing. Manor claims concealing his identity was necessary to avoid the company being “destroyed”.
Joseph Sansone, co-chief of the SEC Market Abuse Unit, said that investors should always perform thorough background checks of all company executives when considering an investment. Sansone said:
“As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets.”
Manor, who has joint Israeli-Canadian citizenship, and Pardo, who is an Israeli citizen, have been permanently barred from acting as officers or directors of any public companies.
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