Professional Documents
Culture Documents
Comp 25537
Comp 25537
Plaintiff,
v.
ARBITRADE LTD.,
CRYPTOBONTIX INC.,
TROY R.J. HOGG,
JAMES L. GOLDBERG,
STEPHEN L. BRAVERMAN, and
MAX W. BARBER,
Defendants, and
Relief Defendant.
I. INTRODUCTION
scheme perpetrated by Arbitrade Ltd. (“Arbitrade”), a Bermudan company, and Cryptobontix Inc.
(“Cryptobontix”), a Canadian company, and their principals, Troy R. J. Hogg (“Hogg”), James L.
gold trader, Max W. Barber (“Barber”). The misconduct involved in this matter centered on an
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Ethereum-based 1 crypto asset that Arbitrade and Cryptobontix owned and controlled called
“Dignity” or “DIG,” which was traded exclusively on a crypto asset-trading platform called
Livecoin.
2. Although this case involves crypto assets, it bears the hallmarks of a classic pump
3. Between May 2018 and January 2019, Arbitrade and Cryptobontix, through Hogg,
Goldberg, Braverman, and Barber, made material misrepresentations and omissions to investors
while they were offering and selling DIG in a series of news and press releases issued to the public
and a press conference. They also participated in a scheme to defraud. Among other things, the
releases falsely claimed that Arbitrade had acquired and received title to $10 billion in gold bullion
and intended to back each DIG token issued and sold to investors with $1.00 worth of this gold.
Arbitrade claimed to have acquired the gold through a purchase transaction with Barber and his
company, SION Trading FZE (“SION”). The Defendants also misrepresented that independent
accounting firms had performed an “audit” of the gold and verified its existence. In reality, the
4. Arbitrade and Cryptobontix, through Hogg, Goldberg, and Braverman, used the
false and misleading releases and press conference to generate demand for DIG on the Livecoin
trading platform. The fraudulent releases had a material impact on the price of DIG sales on this
trading platform. Simultaneous with Arbitrade and Cryptobontix conducting the fraudulent
promotional campaign, Hogg and Goldberg, with Braverman’s assistance, sold DIG tokens on the
1
Ethereum describes itself as a technology for building apps and organizations, holding assets,
transacting and communicating without being controlled by a central authority. It supports smart
contracts, which digitize agreements by turning the terms of an agreement into computer code that
automatically executes when the contract terms are met.
2
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Livecoin trading platform at artificially inflated prices, which resulted in proceeds totaling about
$36.8 million.
a. Arbitrade, Cryptobontix, Hogg, and Goldberg violated Sections 5(a) and (c)
of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77e(a) and (c)];
b. Hogg and Goldberg violated Sections 17(a)(1), (2), and (3) of the Securities
U.S.C. § 78(j)(b)], and Rules 10b-5(a), (b), and (c) [17 C.F.R. § 240.10b-5(a), (b), and (c)] of the
d. Hogg is liable as a control person under Section 20(a) of the Exchange Act
[15 U.S.C. § 78t(a)] for Cryptobontix’s violations of Section 10(b) [15 U.S.C. § 78(j)(b)], and
Rules 10b-5(a), (b), and (c) [17 C.F.R. § 240.10b-5(a), (b), and (c)] of the Exchange Act.
e. Hogg and Goldberg are liable as control persons under Section 20(a) of the
Exchange Act [15 U.S.C. § 78t(a)] for Arbitrade’s violations of Section 10(b) [15 U.S.C. §
78(j)(b)], and Rules 10b-5(a), (b), and (c) [17 C.F.R. § 240.10b-5(a), (b), and (c)] of the Exchange
Act.
Cryptobontix, Hogg, and Goldberg of Section 10(b) [15 U.S.C. § 78(j)(b)], and Rules 10b-5(a),
(b), and (c) [17 C.F.R. § 240.10b-5(a), (b), and (c)] of the Exchange Act.
proceeds of Defendants’ securities violations without any legitimate entitlement to the funds.
3
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6. The Commission requests, among other things, that this Court enter orders: (a)
permanently restraining and enjoining Defendants from violating these provisions of the federal
securities laws; (b) directing Defendants and Relief Defendant to pay disgorgement with
prejudgment interest based upon these violations; (c) directing Defendants to pay civil money
penalties; and (d) issuing an officer and director bar against Hogg, Goldberg, Braverman, and
Barber.
A. Defendants
its securities have never been registered with the Commission in any capacity.
Ontario, Canada. Cryptobontix and its securities have never been registered with the Commission
in any capacity.
9. Hogg is a resident of Grand Bend, Ontario, Canada. Hogg is the founder, owner,
and sole officer and director of Cryptobontix. Although Hogg never held a title as an officer or
director of Arbitrade, Hogg was an undisclosed control person of the company. He exercised
overall control over Arbitrade and was the 60% owner of the company.
person of Arbitrade because he exercised significant control over the day-to-day business affairs
of Arbitrade and had the second largest ownership interest in the company. From April 1989
through April 2018, Goldberg was a registered representative associated with 12 broker-dealers
4
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11. Braverman is a resident of Newbury Park, California. Braverman was held out as
the Chief Operations Officer of Arbitrade. From September 1988 through June 2018, Braverman
was a registered representative associated with 21 broker-dealers registered with the Commission.
12. Barber is a resident of Salt Lake City, Utah. Barber is the founder, owner, and
B. Relief Defendant
13. SION is a United Arab Emirates company engaged in the business of precious
metals trading with principal place of business in Dubai, United Arab Emirates. SION has never
been registered with the Commission in any capacity. SION received ill-gotten gains in the form
14. This case involves the offer and sale of securities in the form of investment
contracts related to a crypto asset. The investment contracts are securities under Section 2(a)(1) of
the Securities Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. §
78c(a)(10)]. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1), and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)] and Sections 21(d), 21(e),
and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa(a)].
15. This Court has personal jurisdiction over Defendants, and venue is proper in the
Southern District of Florida, because, among other things, one Defendant resides in this District,
Defendants participated in the offer, purchase, or sale of securities in this District, and many of
Defendants’ acts and transactions constituting violations of the Securities Act and Exchange Act
5
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16. In connection with the conduct alleged in this Complaint, Defendants, directly or
indirectly, singly or in concert with others, have made use of the means or instrumentalities of
A. Background on Defendants
17. In early 2017, Hogg, through his company Cryptobontix, used Russian developers
to create a new Ethereum-based crypto asset, which was later called “Dignity” or “DIG.”
18. Hogg’s purported plan was to fund a variety of crypto asset related business
ventures, including a proprietary crypto asset-trading platform, a merchant payment platform, and
a crypto asset mining operation, through sales of these newly created DIG tokens.
19. All three billion DIG tokens created were owned and controlled by Hogg and
Cryptobontix, who arranged for them to begin trading exclusively on a Russian crypto asset-
20. Hogg recruited Goldberg and Braverman to assist with this new venture, and he
used Arbitrade, another shell company he controlled, to be the corporate face behind the enterprise.
21. Arbitrade and Cryptobontix’s plan was to do an “initial coin offering” of DIG
tokens.
22. Arbitrade and Cryptobontix promoted their business plans and the DIG tokens
23. Arbitrade’s website stated that DIG purchasers could expect profits based on the
success of its underlying business ventures, including mining of crypto assets and the creation of
6
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24. In particular, Arbitrade’s website represented that DIG tokens would be redeemable
for gold, and that the supply of gold available for investor redemptions would be directly dependent
on the extent to which the companies’ business activities generated profits to fund gold purchases.
25. While Arbitrade and Cryptobontix did undertake efforts to build a crypto asset-
trading platform and merchant payment platform, none of these ventures was ever completed.
They were only minimally successful with crypto asset mining and generated very little revenue
for the business. Likewise, the initial coin offering that Arbitrade and Cryptobontix planned to
releases their intention to back the DIG tokens with gold worth $1 per token, despite the fact that
27. In the spring of 2018, Hogg and Goldberg were introduced to Barber and his
28. Following negotiations that were handled by Hogg, in late June 2018, Arbitrade
and SION executed a “Memorandum of Understanding” (MOU) pursuant to which they “agreed
to execute a definitive contract” under which Arbitrade would purportedly purchase $10 billion of
its “bullion requirements” from SION within the term of 15 years in exchange for, among other
29. Under this MOU, Arbitrade also agreed to pay SION an annual fee based on a
million.
7
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30. Within a few days of executing the MOU, Arbitrade and SION signed an “Asset
Pledge Agreement,” under which SION agreed to provide to Arbitrade a “Safe Keeping Receipt”
31. This purported gold purchase deal was finalized in September 2018 when
Arbitrade and SION executed an “Assignment Agreement” purporting to transfer to Arbitrade “all
of [SION’s] ownership rights and title in the Gold which vests in [SION] pursuant to the [Safe
Keeping Receipt].”
32. The one page Safe Keeping Receipt issued by G4S Cash Services LLC (“G4S”), a
company that specializes in vaulting and transport of valuable assets, was attached to the
Assignment Agreement.
33. The Safe Keeping Receipt does not refer to Arbitrade or to SION holding title to
34. Instead, it makes cryptic reference to some sort of “package” held in a vault under
35. All of the agreements regarding this purported gold acquisition transaction were
36. Hogg handled the negotiations between Arbitrade and SION and had the final word
on the deal.
37. The agreements between Arbitrade and SION, along with the Safe Keeping
Receipt, constitute the entire basis for Arbitrade’s claim to have acquired title to $10 billion worth
of gold.
38. Arbitrade never received any information from Barber or SION regarding the origin
8
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39. It is highly unlikely that the gold referred to in the Safe Keeping Receipt even exists.
“UBS” as referenced in the G4S Safe Keeping Receipt appear to be forgeries as they contain
numerous spelling and punctuation errors, and significant portions are illegible.
41. To create the appearance that the gold transaction was legitimate, Arbitrade also
engaged the services of two accounting firms to evaluate and confirm certain details of the
transaction.
Elliott Davis, LLC (“Elliott Davis”), to confirm the issuance of the Safe Keeping Receipt and that
the Assignment Agreement was properly executed and contained provisions assigning SION’s
43. Although Elliot Davis returned a report acknowledging this information, the report
did not confirm – and Arbitrade never asked Elliot Davis to do so – whether SION actually
possessed real, much less transferable, ownership rights or title to gold bullion.
44. Similarly, in September 2018 Arbitrade retained BDO USA, LLP (“BDO”)
45. Based upon Arbitrade’s request, BDO issued a report stating only that it had
confirmed that G4S issued the Safe Keeping Receipt, after SION provided BDO with a copy of a
document that had certified an unspecified value in holdings to G4S personnel and proof that this
document was placed in a vault there. BDO’s report did not confirm whether SION possessed
46. Arbitrade, Hogg, Goldberg, and Braverman never asked Elliott Davis or BDO to
9
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47. Neither Hogg, Goldberg, nor Braverman objected to the narrow parameters of
48. Moreover, they ignored the red flag presented when SION told BDO to drop its
request for a video conference with the G4S employee whose signature purportedly appears on the
49. Arbitrade also acquiesced to SION’s requirement that Arbitrade should have no
50. Around October 2018, Arbitrade tasked Braverman with hiring Bureau Veritas, a
company that specializes in inspection and certification services, to provide an opinion about the
51. Bureau Veritas refused to accept the engagement when it became clear that
Arbitrade wanted the firm to issue its opinion without conducting any physical examination of the
gold, with Braverman telling the firm that “[c]ounting bars I believe is overkill.”
52. To increase demand for DIG on the Livecoin trading platform, beginning in around
March 2018 and continuing until January 2019, Arbitrade and Cryptobontix engaged in a
promotional campaign to tout the business and DIG tokens through emailed news releases and
press releases disseminated to the public, and at least one “press conference.”
53. During the course of this promotional activity, Arbitrade and Cryptobontix, through
Hogg, Goldberg, Braverman, and Barber, made material misstatements or omissions in several
releases and in the press conference concerning Arbitrade’s purported acquisition of billions of
10
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54. Hogg and Goldberg reviewed and approved at least three of the false and
misleading releases before they were issued to the public, and Hogg participated in the press
conference.
55. Braverman also reviewed at least one of the false press releases prior to its issuance,
and Barber reviewed two of the releases before they went out.
56. On May 24, 2018, Arbitrade and Cryptobontix issued an email news release
purporting to correct various “online rumors,” including the companies’ gold acquisition plans.
57. The news release claimed that Arbitrade was acquiring $8.7 billion worth of “four
bullions (gold, silver, platinum, and palladium) that will back the company’s four major tokens,”
including DIG.
58. The news release compared this bullion acquisition to the purchase of a house with
a mortgage, whereby Arbitrade would be receiving title to the bullion from the seller, who would
then place a debt against the bullion under a structured financing plan over a certain period of time.
59. According to the release, Cryptobontix and Arbitrade planned to use half of the
daily proceeds from their crypto asset operations to pay off the debt on the $8.7 billion bullion
purchase.
60. The news release also claimed that investors would be able to redeem their DIG
61. On June 28, 2018, Arbitrade held a telephonic “press conference” during which
Hogg announced and discussed the company’s “partnership” with SION through which he claimed
62. During this call, Hogg also stated that Arbitrade had “basically recreated the gold
11
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63. On July 5, 2018, Arbitrade and Cryptobontix issued another email news release
announcing, among other things, Arbitrade’s “definitive deal” to acquire $10 billion in gold bullion
64. This news release claimed that Arbitrade would have the title certificate to the gold
bullion, which was described as the Safe Keeping Receipt, in hand within two weeks, and the gold
65. According to this release, out of the $10 billion of gold bullion acquired, $3 billion
worth ($1.00 worth of gold for every token issued) was allocated to backing DIG, with the
66. A few months later, on November 5, 2018, Arbitrade issued a press release
announcing that the company had received title to gold bullion worth “in excess of $10 billion,”
which would be used to back its tokens, and that this gold was being “stored at independent security
facilities.”
67. In this press release, Arbitrade further claimed to have completed the required
“regulatory gold vaulting verification compliance.” The release also stated that an independent
public accounting firm had “verified the account in good standing” and “confirmed” a Safe
Keeping Receipt of the gold through “direct confirmation from the independent secure vaulting
company.”
68. On January 9, 2019, Arbitrade issued a press release announcing that its December
“shipment of gold” from SION “has been vaulted and secured” in the form of an “additional $3.8m
12
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69. The release also stated that, “[u]tilizing SION’s procurement network, Arbitrade
ensures consistent growth of its precious metals holdings, going above and beyond the $10 billion
70. The release further claimed that SION had “provided $250 million in credit” to
71. The representations made in these news and press releases and the conference call
concerning Arbitrade’s purported acquisition of billions of dollars’ worth of gold bullion were
72. Arbitrade never acquired or received title to $10 billion in gold bullion.
73. Moreover, no audit of the $10 billion in gold was ever performed by a major
74. BDO never audited the gold, but merely confirmed certain documentation that
75. Likewise, the statements made in the November 5, 2018, press release regarding
verification of the account and the Safe Keeping Receipt by an independent accounting firm are
misleading given that Arbitrade’s title to real gold did not exist and Arbitrade never completed any
76. The false and misleading news releases and conference call served to create demand
for DIG and had a material impact on the price of DIG sales on the Livecoin trading platform.
77. Except for the January 9, 2019, press release, each of the fraudulent releases
13
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78. For example, following the May 24, 2018, email news release, the price of DIG
jumped from about $0.11 to $0.16 a token, an over 45% increase in price.
79. Simultaneous with Arbitrade and Cryptobontix conducting the false promotional
campaign, Hogg and Goldberg sold DIG tokens, which were owned by Cryptobontix, on the
Livecoin trading platform at artificially inflated prices for proceeds totaling about $36.8 million.
80. Between the end of 2017 and mid-2019, the entire time period during which Hogg
and Goldberg sold DIG tokens on Livecoin, they made proceeds totaling about $45 million.
81. Hogg and Goldberg exclusively handled all of these sales of DIG on Livecoin and
82. DIG investors committed funds in the form of Bitcoin or other crypto assets to
83. DIG investors’ fortunes were inextricably tied to the success or failure of the
management of Cryptobontix and Arbitrade to generate a profit for investors, namely an increase
in the value of their DIG tokens. The fortunes of investors and the companies’ management were
also intertwined because management held and received DIG tokens through which they expected
to receive a profit.
84. DIG investors’ role was limited to purchasing the DIG tokens through the Livecoin
trading platform. Investors had no role in the business operations of Cryptobontix or Arbitrade
and were entirely passive. Instead, investors relied solely on Arbitrade and Cryptobontix, and their
management, to generate a profit for investors, namely an increase in the value of their DIG tokens.
Investors’ expectation of those profits came from, among other things, the representations that
Arbitrade and Cryptobontix would obtain the promised gold to back the DIG tokens, and that
investors would be able to redeem DIG tokens for gold, of which the supply would be directly
14
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dependent on the extent to which revenues were generated to fund company gold purchases.
Investors would have also expected profits based on the success of Arbitrade’s underlying business
ventures, including mining of crypto assets and the creation of a crypto asset trading platform and
85. No registration statement was filed or in effect for the DIG tokens during the time
of the events set forth in this Complaint. Furthermore, no exemptions from registration are
86. Braverman was responsible for converting the Bitcoin proceeds of their DIG sales
to cash through an account he had at a U.S.-based crypto asset-trading platform in the name of
87. The cash would be transferred into Rozgold’s bank account, which Braverman
88. Braverman also retained some of the proceeds from the Bitcoin sales for himself.
89. Braverman falsely represented to the crypto asset-trading platform that he was
trading for the benefit of Rozgold and failed to disclose that he was in fact engaged in crypto asset
90. SION received at least $2.5 million in ill-gotten gains in the form of proceeds from
91. The DIG token has since been delisted from the Livecoin trading platform as of
15
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COUNT I
Violations of Sections 5(a) and (c) of the Securities Act
(Against Arbitrade, Cryptobontix, Hogg and Goldberg)
92. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
93. No registration statement was filed or in effect with the Commission pursuant to the
Securities Act with respect to the securities Arbitrade, Cryptobontix, Hogg and Goldberg offered
and sold as described in this Complaint and no exemption from registration existed with respect
to these securities.
94. From at least May 2018 to January 2019, Arbitrade, Cryptobontix, Hogg and
without a registration statement having been filed or being in effect with the Commission as to
such securities.
95. By reason of the foregoing, Arbitrade, Cryptobontix, Hogg and Goldberg violated,
and unless enjoined, are reasonably likely to continue to violate Sections 5(a) and (c) of the
16
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COUNT II
Violations of Section 17(a)(1) of the Securities Act
(Against Hogg and Goldberg)
96. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
97. From at least May 2018 to January 2019, Hogg and Goldberg, in the offer or sale
98. By reason of the foregoing, Hogg and Goldberg violated, and, unless enjoined, are
reasonably likely to continue to violate, Section 17(a)(1) of the Securities Act [15 U.S.C. §
77q(a)(1)].
COUNT III
Violations of Section 17(a)(2) of the Securities Act
(Against Hogg and Goldberg)
99. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
100. From at least May 2018 to January 2019, Hogg and Goldberg, in the offer or sale
interstate commerce or by use of the mails, directly or indirectly, negligently obtained money or
property by means of any untrue statement of a material fact or any omission to state a material
fact necessary in order to make the statements made, in light of the circumstances under which
101. By reason of the foregoing, Hogg and Goldberg violated, and, unless enjoined, are
reasonably likely to continue to violate, Section 17(a)(2) of the Securities Act [15 U.S.C. §
77q(a)(2)].
17
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COUNT IV
Violations of Section 17(a)(3) of the Securities Act
(Against Hogg and Goldberg)
102. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
103. From at least May 2018 to January 2019, Hogg and Goldberg, in the offer or sale
transactions, practices and courses of business which operated or would have operated as a fraud
104. By reason of the foregoing, Hogg and Goldberg violated, and, unless enjoined, are
reasonably likely to continue to violate, Section 17(a)(3) of the Securities Act [15 U.S.C. §
77q(a)(3)].
COUNT V
Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act
(Against Arbitrade, Cryptobontix, Hogg and Goldberg)
105. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
106. From at least May 2018 to January 2019, Arbitrade, Cryptobontix, Hogg and
Goldberg, directly and indirectly, by use of any means or instrumentality of interstate commerce,
107. By reason of the foregoing, Arbitrade, Cryptobontix, Hogg and Goldberg violated,
and, unless enjoined, are reasonably likely to continue to violate, Section 10(b) [15 U.S.C. §
78(j)(b)] and Rule 10b-5(a) of the Exchange Act [17 C.F.R. § 240.10b-5(a)].
18
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COUNT VI
Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act
(Against Arbitrade, Cryptobontix, Hogg and Goldberg)
108. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
109. From at least May 2018 to January 2019, Arbitrade, Cryptobontix, Hogg and
Goldberg, directly and indirectly, by use of any means or instrumentality of interstate commerce,
or of the mails, knowingly or recklessly made untrue statements of material facts and omitted to
state material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading in connection with the purchase or sale of securities.
110. By reason of the foregoing, Arbitrade, Cryptobontix, Hogg and Goldberg violated,
and, unless enjoined, are reasonably likely to continue to violate, Section 10(b) [15 U.S.C. §
78(j)(b)] and Rule 10b-5(b) of the Exchange Act [17 C.F.R. § 240.10b-5(b)].
COUNT VII
Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act
(Against Arbitrade, Cryptobontix, Hogg and Goldberg)
111. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
112. From at least May 2018 to January 2019, Arbitrade, Cryptobontix, Hogg and
Goldberg, directly and indirectly, by use of any means or instrumentality of interstate commerce,
or of the mails, knowingly or recklessly engaged in acts, practices and courses of business which
operated or would have operated as a fraud or deceit upon any person in connection with the
113. By reason of the foregoing, Arbitrade, Cryptobontix, Hogg and Goldberg violated,
and, unless enjoined, are reasonably likely to continue to violate, Section 10(b) [15 U.S.C. §
78(j)(b)] and Rule 10b-5(c) of the Exchange Act [17 C.F.R. § 240.10b-5(c)].
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COUNT VIII
Control Person Liability under Section 20(a) of the Exchange Act for Violations of Section
10(b) of the Exchange Act and Rule 10b-5 thereunder by Cryptobontix
(Against Hogg)
114. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
115. At all relevant times, Hogg was a control person of Cryptobontix for purposes of
116. As alleged above in Counts V-VII, from approximately May 2018 through January
2019, Cryptobontix violated Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rules
10b-5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)].
117. As a control person of Cryptobontix, Hogg is jointly and severally liable with and
to the same extent as Cryptobontix for each of the violations of Section 10(b) of the Exchange Act
[15 U.S.C. § 78(j)(b)], and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b),
and (c)].
118. By reason of the foregoing, Hogg has violated, and unless enjoined, is reasonably
likely to continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rules
10b-5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)].
COUNT IX
Control Person Liability under Section 20(a) of the Exchange Act for Violations of Section
10(b) of the Exchange Act and Rule 10b-5 thereunder by Arbitrade
(Against Hogg and Goldberg)
119. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
120. At all relevant times, Hogg and Goldberg were control persons of Arbitrade for
20
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121. As alleged above in Counts V-VII, from approximately May 2018 through January
2019, Arbitrade violated Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rules 10b-
5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)].
122. As control persons of Arbitrade, Hogg and Goldberg are jointly and severally liable
with and to the same extent as Arbitrade for each of the violations of Section 10(b) of the Exchange
Act [15 U.S.C. § 78(j)(b)], and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a),
123. By reason of the foregoing, Hogg and Goldberg have violated, and unless enjoined,
are reasonably likely to continue to violate Section 10(b) of the Exchange Act [15 U.S.C. §
78(j)(b)], and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)].
COUNT X
Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act
by Cryptobontix, Arbitrade, Hogg and Goldberg
(Against Braverman and Barber)
124. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
125. As alleged above in Count V, Cryptobontix, Arbitrade, Hogg and Goldberg violated
Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(a) thereunder [17 C.F.R.
§ 240.10b-5(a)].
126. From at least May 2018 to January 2019, Braverman and Barber knowingly, or with
extreme recklessness, provided substantial assistance to, and thereby aided and abetted violations
of Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(a) thereunder [17
127. By reason of the foregoing, pursuant to Section 20(e) of the Exchange Act [15
U.S.C. § 78t(e)]. Braverman and Barber aided and abetted, and unless enjoined, are reasonably
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likely to continue to aid and abet, violations of Section 10(b) of the Exchange Act [15 U.S.C. §
COUNT XI
Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act
by Cryptobontix, Arbitrade, Hogg and Goldberg
(Against Braverman and Barber)
128. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
129. As alleged above in Count VI, Cryptobontix, Arbitrade, Hogg and Goldberg
violated Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(b) thereunder
130. From at least May 2018 to January 2019, Braverman and Barber knowingly, or with
extreme recklessness, provided substantial assistance to, and thereby aided and abetted violations
of Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(b) thereunder [17
131. By reason of the foregoing, pursuant to Section 20(e) of the Exchange Act [15
U.S.C. § 78t(e)]. Braverman and Barber aided and abetted, and unless enjoined, are reasonably
likely to continue to aid and abet, violations of Section 10(b) of the Exchange Act [15 U.S.C. §
COUNT XII
Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act
by Cryptobontix, Arbitrade, Hogg and Goldberg
(Against Braverman and Barber)
132. The Commission repeats and realleges Paragraphs 1 through 91 of its Complaint as
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133. As alleged above in Count VII, Cryptobontix, Arbitrade, Hogg and Goldberg
violated Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(c) thereunder
134. From at least May 2018 to January 2019, Braverman and Barber knowingly, or with
extreme recklessness, provided substantial assistance to, and thereby aided and abetted violations
of Section 10(b) of the Exchange Act [15 U.S.C. § 78(j)(b)], and Rule 10b-5(c) thereunder [17
135. By reason of the foregoing, pursuant to Section 20(e) of the Exchange Act [15
U.S.C. § 78t(e)]. Braverman and Barber aided and abetted, and unless enjoined, are reasonably
likely to continue to aid and abet, violations of Section 10(b) of the Exchange Act [15 U.S.C. §
COUNT XIII
Unjust Enrichment
(Against Relief Defendant SION)
136. The Commission repeats and realleges Paragraphs 1 through 91 of this Complaint
137. SION received at least $2.5 million in ill-gotten gains in the form of proceeds from
fraudulent and unregistered sales of DIG tokens, to which it lacks a legitimate claim.
138. SION obtained these funds as part of the securities law violations alleged above,
under circumstances in which it is not just or equitable for it to retain the funds.
139. By reason of the foregoing, SION has been unjustly enriched and must disgorge its
ill-gotten gains.
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A.
employees, attorneys, and all persons in active concert or participation with them, and each of
them, from violating the federal securities laws alleged in this Complaint.
B.
Disgorgement
Issue an Order directing Defendants and Relief Defendant SION to disgorge all ill-gotten
gains or proceeds received including prejudgment interest thereon as a result of the acts and/or
C.
Penalties
Issue an Order directing Defendants to pay civil money penalties pursuant to Section 20(d)
of the Securities Act [15 U.S.C. § 77t(d)] and/or Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)].
D.
Issue an Officer and Director bar against Hogg, Goldberg, Braverman, and Barber pursuant
to Section 20(e) of the Securities Act and/or Section 21(d)(2) of the Exchange Act.
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E.
Further Relief
Grant such other and further relief as may be necessary and appropriate.
F.
Retention of Jurisdiction
Retain jurisdiction over this action and over the Defendants in order to implement and carry
out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable
application or motion by the Commission for additional relief within the jurisdiction of this Court.
The Commission hereby demands a jury trial on any and all issues so triable.
Alice K. Sum
Alice K. Sum, Esq.
Trial Counsel
Fla. Bar No. 354510
Direct Dial: (305) 416-6293
Email: [email protected]
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