The Securities and Exchange Commission (SEC) has indicted Michael W. Ackerman for defrauding around 150 investors of at least $33 million with his digital asset scheme.
Per the press release, Ackerman claimed that he had developed a proprietary algorithm that allowed him to generate extraordinary profits while trading in cryptocurrencies and raised over $33 million.
The alleged fraudster also formed two entities – Q3 Trading Club and Q3 I LP – to attract investors towards his schemes.
The watchdog also brought charges against two business partners of the Ohio-based man, one of whom is a physician. The regulator also pointed out that a number of victims of the fraudulent scheme are physicians.
Explaining the scheme, Eric I. Bustillo, director of the SEC’s Miami regional office, said: “As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy.”
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Fraudilating financials to the investors
The SEC’s complaint alleges that Ackerman misled investors about the performance of his digital currency trading, his use of investor funds, and the safety of investor funds in the Q3 trading account.
He was also accused of doctoring computer screenshots taken of Q3’s trading account to create the illusion that Q3 was highly invested in cryptocurrencies and was extraordinarily profitable, holding assets of as much as $310 million.
Per the SEC, the Q3’s trading account never held more than $6 million. Further, he was also accused of using $7.5 million of the investors for personal use.
“Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use,” Bustillo added.
The market regulator brought charges of violating the antifraud provisions of the federal securities laws.
In addition to the SEC’s charges, the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission also filed similar charges against Ackerman.