SEC Crypto Victory: Regulator Wins $1.1M Default Judgment Against Alleged Fraudster
In a significant development for regulatory enforcement in the digital asset space, the US Securities and Exchange Commission (SEC) has achieved a notable win. The case involves alleged crypto fraud and resulted in a substantial financial penalty awarded via a default judgment.
SEC Crypto Action Leads to $1.1 Million Judgment
A Georgia federal court judge recently ruled in favor of the SEC, awarding the regulator over $1.1 million in a case against Keith Crews. This outcome came after Crews failed to respond to a lawsuit filed by the SEC in August 2023. The default judgment, issued on June 3, holds Crews liable for financial penalties totaling more than $1.1 million.
The Allegations: A Purported Crypto Fraud Scheme
The SEC’s lawsuit alleged that Keith Crews operated a crypto fraud scheme through his companies, Four Square Biz and Stem Biotech, between October 2019 and May 2021. The core of the scheme involved the sale of a digital asset called “Stemy Coin.” The SEC claimed Crews raised at least $800,000 from around 200 investors.
The regulator stated that many investors were solicited through relationships within African-American and church communities. Crews allegedly made false representations about Stemy Coin, claiming it was backed by stem cell technology, hard assets like gold, and that his companies had existing labs, products, and a history of providing stem cell treatments.
Default Judgment: Consequences for Keith Crews
Because Keith Crews did not respond or defend himself against the SEC’s complaint, the court entered a default judgment. Judge Tiffany Johnson ordered Crews to pay disgorgement of $530,000 in net profits from his alleged actions, nearly $51,000 in prejudgment interest, and a civil penalty of $530,000. In addition to the financial penalties, the judgment permanently bans Crews from future violations of securities laws.
The SEC’s complaint detailed the alleged misrepresentations, stating that despite claims of partnerships and technology, Crews’s entities had no existing stem cell technology, products, operations, or partnerships with the claimed entities. The complaint cited violations of federal securities laws related to fraud and registration requirements.
Why This SEC Crypto Win Matters
This case represents a successful enforcement action for the SEC crypto division, particularly one concluding with a decisive judgment. While the SEC has pursued numerous actions in the crypto space, obtaining a default judgment and significant penalties highlights the consequences of failing to engage with regulatory processes. It serves as a reminder that the SEC continues to monitor the digital asset market for potential misconduct, aiming to protect investors from schemes like the alleged crypto fraud involving Stemy Coin and Keith Crews. Investors should remain cautious and conduct thorough research before investing in digital assets, especially those promoted with guaranteed returns or unsupported technological claims.
Summary
The SEC secured a $1.1 million default judgment against Keith Crews, accused of running a crypto fraud scheme involving Stemy Coin. Crews’s failure to appear in court led to the ruling, which includes significant financial penalties and a permanent ban from securities law violations. This outcome underscores the SEC’s ongoing efforts in the SEC crypto enforcement landscape.
