US Government shutdown delays crypto fraud trial
The long-awaited cryptocurrency fraud trial linked to Bermudian-based Arbitrade Ltd has been postponed indefinitely because of the ongoing United States Government shutdown.
According to a new order issued on Tuesday by Judge Melissa Damian of the US District Court for the Southern District of Florida, the Securities and Exchange Commission’s unopposed motion to stay proceedings has been granted. The SEC had requested a stay and an extension of deadlines to respond to pending motions “until after the ongoing Federal Government shutdown has ended”.
The SEC stated in its motion: “As a result of the shutdown, most SEC attorneys and employees have been furloughed and are prohibited from working – even on a voluntary basis – except in limited circumstances.”
The trial of four executives — Canadian national Troy Hogg and American defendants James Goldberg, Stephen Braverman and Max Barber — had been scheduled to begin on Monday in Miami. The proceedings, expected to last two to three weeks, will now remain on hold until the shutdown is resolved.
It is the second time in three months that the trial has been postponed, the first having occurred in July after a series of eleventh-hour filings by the parties.
The case stems from SEC allegations that Arbitrade, its Canadian affiliate Cryptobontix, and the four defendants orchestrated a $37 million “pump-and-dump” scheme involving the Dignity cryptocurrency. Regulators say the companies falsely claimed to have acquired $10 billion in gold bullion to back the token, misleading investors in the US, Canada and Bermuda.
Arbitrade established operations in Bermuda in 2018, purchasing Victoria Hall in Hamilton for $6.5 million and promising to create hundreds of jobs. Those plans collapsed amid international scrutiny and subsequent fraud findings by the Ontario Securities Commission.
The SEC is seeking permanent injunctions, civil penalties and the return of profits allegedly gained from the scheme.
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