Self-Help Firm That Mostly Took Bitcoin as Payment Mostly Just Helped Itself, SEC Charges
Mindset 24 Global LLC was, according to federal prosecutors, a “textbook” pyramid scheme with a million-dollar crypto twist.
- The Securities and Exchange Commission (SEC) on Monday charged Kentuckian John Brian McLane, Jr. and Floridian Paul Anthony Nash with defrauding victims of their personal development multilevel marketing company, Mindset 24.
- Prosecutors say McLane and Nash sold Mindset 24’s 735 investors on a promise of 70% returns powered by self-help kit sales, taking in over $1 million – mostly in bitcoin – during their 11-month run.
- Mindset 24 helped victims set up their bitcoin wallets during the investor on-boarding process, prosecutors allege. Mindset 24’s website listed “bitcoin as currency” as one of its selling points when viewed by CoinDesk Wednesday afternoon.
- The alleged Ponzi scheme highlights how bitcoin’s buzzword appeal and permissionless backbone can be co-opted by scammers. With no central authority to reverse transactions bitcoin remains a compelling choice, even if a transparent blockchain makes value movements easy to track.
- Five percent of Mindset 24’s million allegedly lined McLane and Nash’s pockets. Two percent allegedly flowed to early backers. Sixty-nine percent was allegedly paid out in commissions. In the end, though, 92% of investors allegedly lost some of their funds – on average $1,168.
- SEC prosecutors claim the pair either knew they were running a “classic Ponzi scheme” or were reckless in not knowing it.
- They charged the pair with unregistered securities sales and multiple counts of securities fraud in U.S. District Court for the Eastern District of Kentucky.
Disclosure
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
