The Securities and Exchange Commission in America has charged siblings John and Tina Barksdale with defrauding thousands of retail investors out of $124m.
The fraud involved two unregistered fraudulent offerings of securities involving a digital token called ‘Ormeus Coin’.
According to the SEC’s complaint, from June 2017 the Barksdales offered and sold Ormeus Coin to investors on crypto trading platforms.
In addition, from June 2017 to April 2018, through a multi-level marketing business called Ormeus Global, the Barksdales offered and sold subscription packages that included Ormeus Coin and an investment in a crypto trading programme.
The SEC has also alleged that John Barksdale held roadshows around the world, and that he and his sister Tina led the production of social media posts, YouTube videos, press releases, and other promotional materials.
In Association with
The SEC complaint alleges that at the events, in the produced materials, and currently on Ormeus Coin’s website, the defendants falsely claimed that Ormeus Coin was supported by one of the largest crypto mining operations in the world, even though they abandoned their mining operations in 2019 after generating less than $3m in total mining revenue.
In many of these investor communications, the defendants falsely stated that Ormeus Coin had a $250m crypto mining operation and was producing $5m to $8m per month in mining revenues.
According to the complaint, to preserve the fiction that Ormeus Coin was successfully mining crypto, the Barksdales arranged for a public website to display a wallet of an unrelated third party showing more than $190m in assets as of November 2021, even though the Ormeus wallets were worth less than $500,000.
Snake-oil salesmen
The complaint also alleges that the Barksdales manipulated Ormeus Coin’s price and misused millions of dollars of investor funds for personal expenses.
"We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit," said Melissa Hodgman, Associate Director in the SEC’s Division of Enforcement.
The complaint charges the Barksdales with violating the federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against John Barksdale.
