The Securities and Exchange Commission (SEC) has accused Miles Guo, a Chinese businessman in exile, and his financial advisor, William Je, of fraudulent and unregistered offerings that raised over $850 million. The SEC claims that Guo and Je misused a large portion of the funds raised from investors to enrich themselves and their family members. In one instance, they allegedly diverted $100 million of investor funds to a hedge fund that belongs to Guo’s son. Guo is also accused of misappropriating funds to purchase a mansion in New Jersey and a Ferrari for his son.
The SEC charged Guo, G Club Operations LLC, and Mountains of Spices LLC with violations of securities law registration provisions. Guo alone was charged for the fourth offering, which raised hundreds of millions of dollars from investors through a crypto asset security known as “H-Coin” or “Himalaya Coin,” and a related stablecoin. Guo allegedly made false claims to potential investors, including stating that 20% of H-Coin’s value was backed by gold and that he would compensate investors for any potential losses.
The SEC seeks permanent injunctions against Guo and Je, disgorgement of ill-gotten gains, civil penalties, and officer and director bars. They also want to prohibit Guo from participating in the issuance, purchase, offer, or sale of any securities, including crypto asset securities, other than for his own personal accounts.
The U.S. Attorney’s Office for the Southern District of New York has also announced charges against Guo and Je. In September 2021, the SEC charged GTV and two other entities with illegal unregistered offerings, and the SEC has since collected over $454 million in disgorgement, prejudgment interest, and penalties, which will be distributed to harmed investors.
The SEC’s investigation is ongoing and being conducted by William Conway, Amanda Rios, Kerri Palen, Daniel Loss, and Sandeep Satwalekar. The case is being supervised by Thomas P. Smith, Jr., and the SEC’s litigation will be led by Mr. Loss, Mr. Conway, and Ms. Rios. The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and multiple international regulators.
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