A pair of siblings are currently in very hot water with the US government and are being prosecuted for allegedly committing fraud in the Ormeus Coin scheme.
On March 8, the Securities and Exchange Commission (SEC) charged siblings John Albert Loar Barksdale and sister Jonathina (Tina) Barksdale with violating federal securities laws and allegedly embezzling at least 12,000 “retail investors worth more than $124 million” . The Department of Justice (DOJ) arrested John overseas and charged him with wire fraud, securities fraud and conspiracy.
Both of the Barksdale siblings are US citizens. According to Reuters, John, 41, lived in Thailand, while John Athina, 45, was in Hong Kong.
Since 2017, there have been two initial coin offerings (ICOs) of Ormeus Coin (ORME). The SEC complaint specifically states that Barksdales lied about “the size, value, and perceived profitability of Ormeus Coin’s cryptocurrency mining assets.”
ORME is an ERC-20 token and a BEP-20 token found in Ethereum (ETH) and the BNB (BNB) chain.
While both siblings created social media posts and videos promoting the project, only John attended road shows and conferences to promote it. Melissa Hodgman, deputy director of the U.S. Securities and Exchange Commission’s Division of Enforcement, compared John to a “snake oil salesman.” She also said that both siblings used “social media, promotional websites and personal roadshows to mislead retail investors for their own personal gain.”
Hodgman also reaffirmed the SEC’s position on scammers in the cryptocurrency industry, stating:
“We will continue to actively pursue individuals who sell securities in investor fraud schemes, no matter what label the promoters apply to their products.”
Both the SEC and the Department of Justice are basing the fraud allegations on alleged misrepresentations that Barksdales told investors about the state of mining at Ormeus. The Oremus Coin website states that mining operations began in November 2017 with physical devices to mine Bitcoin (BTC), Litecoin (LTC) and Dash (Dash). The Barksdales claimed that the project had invested $250 million in mining operations backed by ORME and that it generated $5 million in monthly revenue.
The project allegedly misled investors by revealing that its vault wallet was worth more than $190 million as of November last year. However, the display was allegedly set up through a separate website that showed the value of an unrelated wallet. The SEC claims the project’s actual wallets were “worth less than $500,000.”
The Justice Department also stated that mining “has never approached a value close to $250 million and has never generated revenue in excess of one million dollars a month.”
John, who wrote the February 26, 2018 blog post on “Why Calculated Risk Is So Important in Life”, is still listed on the Ormeus Coin and Ormeus Cash websites as an advisor. A trial date will be set while the Barksdales are in custody.
The recent ruling by the 11th Circuit Court of Appeals could give the SEC more leverage in this case by allowing prosecutors to use a wider range of evidence. securities fraud against the founders of BitConnect.
Related: SEC fails to find BitConnect founder convicted in $2.4 billion fraud case
The Securities and Exchange Commission has been hawkish about common advertising practices in the cryptocurrency industry and whether it is securities fraud. On March 3, reports surfaced that the Commission is currently targeting non-fungible tokens (NFTs) used for fundraising, “like traditional securities”.