After identifying a person raising capital while falsely pretending to hold the requisite securities licenses, the Securities and Exchange Commission (SEC) has intervened in an ongoing alleged digital asset fraud.
The SEC has brought an emergency action and a temporary restraining order against Shawn C. Cutting of Sandpoint, Idaho, demanding that his assets be immediately frozen in connection with the allegations.
Cutting is accused of raising millions of dollars by making false statements about his licensing status, as well as misrepresenting investment returns and misappropriating investor funds, according to the regulator.
Cutting allegedly started raising capital from investors on a fake prospectus in October 2017, securing $6.9 million from 450 individual investors, according to the SEC. Investors were advised that the funds would be pooled and invested in digital assets, with a monthly return of more than 50%.
Cutting reportedly misrepresented himself as a financial advisor and claimed to have securities licenses, all of which were false. He is also accused of misappropriating hundreds of thousands of dollars for personal expenses such as luxury cars, home renovations, and the wedding of his daughter.
He is then accused of soliciting more capital by falsifying reports in order to entice additional investment. In order to extend the scam, Cutting reportedly spent $760,000 on Ponzi-style payouts to investors.
The Securities and Exchange Commission has lodged a lawsuit against Cutting in the United States District Court for the District of Idaho, alleging a number of violations of the Securities Act of 1933. The SEC has asked the court for immediate relief as well as a permanent injunction to stop Cutting’s suspected investment solicitation activity.
In addition, the lawsuit seeks disgorgement of funds received illegally, as well as prejudgment interest and civil penalties.