The US Securities and Exchange Commission (SEC) has halted a fast-moving initial coin offering (ICO) that was seeking to raise up to $30 from 300 investors to develop a Blockchain-based platform for financing, trading and paying for precious diamonds.
The SEC’s Cyber Unit today obtained an emergency asset freeze against South Florida-based Argyle Coin and filed charges against its principal Jose Angel Aman. The agency called the project as an outright securities fraud that doesn’t differ from a typical pyramid or Ponzi scheme.
Argyle Coin was founded by self-proclaimed diamond industry veteran Jose Arman with the goal of building an e-commerce platform powered by cryptocurrency for the precious metal industry.
Argyle Coin promoted their offering as the world’s first cryptocurrency to correlate their tokens with real diamonds that worth over $25,000,000. It also claims to create a new class of ICOs that will guarantee the performance of its blockchain platform.
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Further, the investors were assured their investment was risk-free. With millions in diamonds in a safe deposit box, their investment was protected if the global diamond market went south, said Aman, explaining why their investment was secure.
Criminal Background of Executives
The scheme was far bigger than the ICO plans alleged in the SEC’s filing against the diamond dealers. Specifically, the agency alleges that Argyle Coin was a continuation of a fraud scheme that Aman orchestrated with two other companies he owns a few years ago.
Back in 2014, Aman’s diamond investment companies – Natural Diamonds Investment Co. (Natural Diamonds) and Eagle Financial Diamond Group Inc (Eagle)- operated from offices on Worth Avenue in Palm Beach and illegally raked in roughly $25 million from at least 100 investors.
It further explains “Aman engaged in unregistered offerings of securities in Natural Diamonds and Eagle as early as May 2014, falsely promising investors that the companies would invest in whole diamonds to cut down and sell for huge profits. Aman was assisted by Harold Seigel and Jonathan H. Seigel, who also have interests in Natural Diamonds and Eagle.”
Argyle Coin is yet another case to be brought by the SEC’s new cyber unit, which was created in 2018 to target violations involving distributed ledger technology and initial coin offerings as part of a new effort to fight cyber-crime.