The United States Securities and Exchange Commission (SEC) is warning that fraudulent digital asset scheme Meta 1 Coin continues to operate.
On December 21, 2021, the regulator provided a status report to the Texas Western District Court on its action against crypto scam Meta 1 Coin Trust.
Let’s recall that the SEC launched this case in March 2020. The SEC’s complaint alleges that Florida residents Robert Dunlap and Nicole Bowdler marketed and sold a purported digital asset called the “Meta 1 Coin” in an unregistered securities offering, conducted through the Meta 1 Coin Trust.
In the latest status report, the SEC explains that Dunlap and Meta1 continue to operate and market the investment scheme through various means, including its website (meta1.io) and on an internet radio show (thejimpriceshow.com).
Meta1’s current White Paper now claims that the Meta1 Coin is backed by $8.8 billion in gold assets (up from $2 billion claimed gold assets in March 2020). By comparison, the current value of United States Treasury-owned gold held in reserve at Fort Knox is approximately $6.2 billion.
Meta1 continues to falsely claim that it is free from U.S. government oversight.
The SEC also says that, following the settlement with Relief Defendant Peter Shamoon, who has failed to make a single payment pursuant to his obligations, Meta1 assigned Shamoon’s role to Meta1 board member, Richard Grassie. From the SEC’s review of the bank records from May 2020 to June 2021, at least $1.4 million in Meta 1 investor funds was deposited into a bank account in Grassie’s name. These investor funds are from over 150 investors located throughout the U.S. and other countries, including Canada, Australia, and New Zealand.
The manner and method of investment follows the previous pattern established by Dunlap: open a bank account for a short period of time, deposit investor funds, spend investor funds on purposes not stated in the White Paper, including withdrawing investor funds using cashier’s checks to pay other related third parties, then close the bank account and open a new one to repeat the process again. During the review period, investors used wire transfers, money orders, cashier’s checks, and checks made out to Grassie to make their investments.
The memo descriptions on these investments include such statements as “Meta 1 certificate,” “Meta 1 coin,” “Investment,” “Gold purchase,” “Gold investment,” and “purchase of stock.” After depositing investor funds in his personal account, Grassie pays other Meta1-related individuals, including Relief Defendants Wanda and Alfred Warner and related companies, pays bills including credit card and loan payments, and withdraws cash as cashier’s checks made payable to himself and other Meta1 employees.
The bank records also show a number of payments and wire transfers to unknown individuals.
The investor funds that went to third party companies were then, in part, transferred back and forth between these company accounts and Grassie’s accounts, transferred to other Meta1-affiliated companies, and used to pay other expenses of the companies, including rent.
The staff also reviewed Grassie’s credit card statements which were paid with investor funds and found that expenses were both personal and potentially business related, with the majority of funds spent on marketing services. There is no evidence of investor money being used for purposes stated in the White Paper.
A number of subpoenas are outstanding. The SEC expects that when these documents are received and scheduled, it will file its motion for monetary remedies and related evidence.