SEC lawsuit against $30 million-plus crypto-currency scam halted due to criminal proceedings

A judge has granted a motion by the U.S. Attorney’s Office to stop the SEC’s action against Edit Pardo and Boaz Manor for their involvement in CG Blockchain, an alleged $30 million crypto currency investment scam.

U.S. District Judge Stanley Chesler cited a parallel criminal investigation into Pardo and Manor in granting the motion to stay the SEC’s action, reasoning that suspending the suit until the conclusion of the criminal proceedings “would best serve the interests of justice.

“A stay would strike the proper balance between the interest of allowing the parties to continue civil litigation and the Immediate Bitcoin public interest of protecting the government’s efforts to enforce the criminal laws,” wrote Justice Chesler.

The case was stopped to avoid giving an advantage

The prosecution argued for a stay to prevent Pardo and Manor from obtaining material through civil discovery that would not otherwise be available to them under the narrow scope of criminal discovery, a sentiment echoed by Judge Chesler.

Manor and Pardo, both Canadian citizens, are each charged with one count of securities fraud, one count of conspiracy to commit wire fraud and three counts of wire fraud.

From August 2017 to September 2018, Canadian citizens were charged with issuing fraudulent, unregistered digital asset securities called BCT tokens to hundreds of investors in the United States and around the world.

The pair is said to have raised at least USD 30 million through an initial currency offering (ICO), ostensibly to finance the development of technology solutions for hedge funds and institutional crypto-currency traders.

Convicted of securities fraud

The SEC complaint alleges that Manor lied to BTC investors about his identity, criminal history, and role in the business, as well as Pardo’s role in the company, the composition of his management team, and falsely claimed that his technology was being used by 20 hedge funds.

In 2012, Manor accepted a lifetime ban from operating in the securities industry after being convicted of fraud related to the collapse of a Toronto-based hedge fund he co-founded. Manor served four years in prison for his conviction in the $106 million scam.