SEC Seeks Action Against Accused Operator of Crypto Fraud Scheme

The United States Securities and Exchange Commission (SEC) is continuing its campaign against cryptocurrency crimes, with an Ohio-based man being the latest person to feel the financial watchdog’s ire. On February 11, the agency filed a press release announcing that it had charged Michael W. Ackerman, an Ohio businessman, for conducting a crypto fraud scheme that milked investors off about $33 million.

Targeting Old Doctors for His Scheme

As the press release explained, Ackerman ran a fraud scheme with two unnamed partners under the umbrella of Q3 Trading Club- a firm which they had established back in June 2017. A year later, they expanded their reach and established Q3 I LP, an investment partnership, and another affiliated company known as Q3 Holdings in the summer of 2018.

As of July 2017, Ackerman and his business partners began collecting investments for the Q3 Trading Club through Facebook, with their ads specifically targeting physicians in a “Physician’s Dads Group” on the popular social media platform.

In their sales pitch, the scammers purportedly claimed that they had designed an algorithmic trading strategy that will ensure mouth-watering profits on traded. Given that this was the height of the crypto boom and they could point to significant gains being made by Bitcoin and other top cryptocurrencies, it wasn’t surprising that they would have made much success. 

The SEC additionally claimed that the fraudsters had formulated screenshots of their company’s accounts and sent them to prospective investors, creating a false impression that their company held as much as $300 million in assets under management- when, in fact, they never had more than $6 million at any point. They also went as far as promising investors up to 50 percent of the company’s profits. 

Ackerman Isn’t Getting Out of this One

Of all the money they got, they only converted a small fraction to cryptocurrencies, although these digital assets were immediately transferred to an offshore trading company based out of the British Virgin Islands. They also took home heavy fees for their work without disclosing any of those to their investors. 

Ackerman is alleged to have personally sought his enrichment between March 2018 and December 2019. He took up to $7.5 million in investor funds and used that to renovate his house, while he also purchased jewelry, a fleet of vehicles, and extensive personal security. The SEC is now seeking to get a civil penalty, a permanent injunction against him, and disgorgement plus prejudgment interest. The Commodity Futures Trading Commission (CFTC) and the U.S. Attorney’s Office for the Southern District of New York have also reportedly filed cases against the scammer.