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November 10, 2021

The SEC has announced awards totaling more than $15 million to two whistleblowers.  Information provided by the first whistleblower, who received $12.5 million, prompted an investigation to open, while information from the second whistleblower, who received $2.5 million, was more limited but helped lead to a successful enforcement action.  SEC

November 9, 2021

The owner of California-based DC Solar, Jeff Carpoff, has been sentenced to 30 years in prison for his role in a billion-dollar Ponzi scheme, the largest criminal fraud scheme ever prosecuted in the Eastern District of California.  Together with his wife Paulette and five other co-conspirators, Carpoff lied to investors about market demand for his company’s mobile solar generator (MSG) units, using false lease contracts and financial statements to back up the lie.  In addition to selling thousands of MSGs that didn’t even exist, the defendants paid prior investors using funds from newer investors, then laundered their ill-gotten gains.  USAO EDCA

October 29, 2021

Following amendments on types of actions that may be considered “related” under whistleblower rules, the SEC has awarded more than $2 million to an individual who was previously awarded for contributing to a successful enforcement action.  According to the agency, the whistleblower’s information sparked investigations by both the SEC and DOJ.  SEC

October 27, 2021

A Court has approved a $38.8 million settlement between the SEC and Akazoo, S.A., which went public in 2019 by way of a SPAC merger and claimed to offer music streaming services.  While the company told investors, both before and after the merger, that it had millions of paying subscribers and was increasing its subscriber base, earning hundreds of millions of dollars, the company in fact had no paying subscribers and negligible revenue.  The company raised nearly $55 million in the SPAC transaction and burned through more than $20 million before the SEC filed its complaint in 2020 and secured an asset freeze.  The $38.8 million disgorgement settlement will be deemed satisfied by the company’s payment of $35 million to investor victims in connection with several private class action lawsuits.  SEC

October 27, 2021

A Greek-based music streaming business called Akazoo S.A., has been ordered to pay $38.8 million to settle charges of defrauding investors in connection with a 2019 special purpose acquisition company (SPAC) business combination.  In order to attract investors, Akazoo allegedly represented that it had more than 38.2 million registered users, 4.5 million paying subscribers, and over $120 million in annual revenue, when in reality it had no paying users and little revenue.  As a result of those misrepresentations, investors lost tens of millions of dollars.  SEC

October 21, 2021

The CFTC has issued a final award of nearly $200 million to a whistleblower whose information significantly contributed to government investigations resulting in successful enforcement actions by the CFTC, another U.S. federal regulator, and a foreign regulator.  In making the award, the CFTC noted that the information provided by the whistleblower was specific and credible, leading to important, direct evidence of wrongdoing, as well as voluntarily provided and timely, even though the CFTC already had an open investigation at the time of the whistleblower’s report.  The CFTC had first issued a preliminary order denying the individual’s application; the whistleblower requested reconsideration and provided information about how his information was utilized, including in the parallel investigations.  CFTC

October 15, 2021

iFinex Inc. and related entities doing business as cryptocurrency trading platform Bitfinex, agreed to pay $1.5 million to resolve charges that they operated as an unregistered futures commission merchant (FCM) and engaged in illegal, off-exchange retail commodity transactions in digital assets with U.S. persons that were not eligible contract participants (ECPs).  The CFTC found that Bitfinex allowed margin trading financed through a peer-to-peer funding program through which Bitfinex customers who held fiat or cryptocurrency in their Bitfinex account would “lend” those funds to other Bitfinex customers who would then use those funds to buy, sell, and trade on the Bitfinex platform, in violation of a 2016 CFTC orderCFTC

October 15, 2021

Tether Holdings Limited and related entities, issuers of the “Tether Token” or USDt, have agreed to pay a civil monetary penalty of $41 million to resolve allegations that they violated the CEA and CFTC regulations by making untrue or misleading statements and/or omitting material facts through statements that Tether maintained sufficient U.S. dollar and other fiat currency reserves in bank accounts to back every USDt in circulation.  In fact, Tether did not hold sufficient currency reserves at all times.  The reserves were inadequate in amount, and were not held in currency in bank accounts, but instead included unsecured receivables and non-fiat assets, which were held by unregulated entities and third-parties including Bitfinex, which commingled reserve funds with operational and customer funds.  The CFTC also found that Tether failed to perform routine professional audits as represented.  CFTC

October 15, 2021

The SEC has granted awards totaling approximately $40 million to two whistleblowers whose contributions helped result in a successful enforcement action.  Approximately $32 million went to a whistleblower whose tip about difficult-to-detect violations launched the investigation, and who then helped agency staff understand complex fact patterns and identify witnesses.  The remaining $8 million went to a whistleblower who reported new information but who waited years before reporting wrongdoing to the agency.  SEC

September 29, 2021

Société Générale S.A. has been ordered to pay a $1.5 million civil monetary penalty for its failure to comply with certain swap dealer requirements, reporting inaccurate swap valuation data, and other failures.  The alleged failures occurred between 2013 and 2021 and involved failing to disclose pre-trade or mid-market marks, failing to accurately report certain swap valuation data, and failing to maintain adequate supervision over mid-market mark disclosures.  CFTC
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