Illegal Crypto Stock Sales Lead SEC to Settle With Nevada Men

(Bloomberg) -- Two Nevada men agreed to settle a lawsuit by securities regulators that accused them of profiting from illegal sales of a Hong Kong company that surged more than 900 percent last year.

The Securities and Exchange Commission suit, filed in federal court in New York on Monday, accuses Nevada attorney T.J. Jesky and his firm’s business affairs manager, Mark F. DeStefano, of making about $1.4 million by illegally selling stock in UBI Blockchain Internet Ltd. in December and January. The two men received 72,000 restricted shares of the company in October and were allowed to sell them at a fixed price of $3.70, the SEC said.

Instead, the two men allegedly sold the shares at much higher prices, from $21.12 to $48.40, after the company’s stock rallied, the SEC said. The sales stopped when the agency halted UBI Blockchain due to “unusual and unexplained market activity” for its shares in January, the SEC said. The suspension expired Jan. 22.

The men agreed to return $1.14 million in profit and pay $188,682 in penalties to settle the claims, without admitting or denying the allegations, according to the agency.

Blockchain is the software ledger that makes bitcoin and other digital currencies possible. UBI Blockchain shares traded as high as $115 in 2017, briefly making it one of the most-valuable public companies in the bitcoin universe.

©2018 Bloomberg L.P.