Philippines’ SEC Issues Cease And Desist Order to BG Wealth’s Crypto Trading Scam

• The Philippines’ SEC issued a Cease and Desist order to BG Wealth for non-compliance and flagged it as financial fraud.

After around a year of running its operations in several jurisdictions, including the US, Samoa, and the Philippines, the latter’s Securities and Exchange Commission (SEC) has finally issued a Cease and Desists order against BG Wealth Sharing Ltd. Through the Filipino regulator’s Enforcement and Investor Protection Department, it directed the company, including its management, representatives, and promoters, to halt its transactions and marketing activities.

What is BG Wealth

BG Wealth is a crypto scam ring founded and operated by Stephen Beard, a self-proclaimed professor and investment guru. According to the Washington State Department of Financial Institutions (DFI), the company marketed itself as an investment group and “the world’s largest hedge fund.”

The fake investment firm enticed people to join its social media channel, particularly on Facebook. From there, its operators urged unsuspecting victims to join its group via messaging apps such as WhatsApp, Telegram, Signal, or Bonchat, where they encouraged them to invest in an associated trading platform, DSJ Exchange.

Initially, BG Wealth gradually builds its members’ confidence by generating “advanced trading signals” with “zero risk.” These eventually translate into unrealized gains in their DSJ accounts of up to $1,500 for every $2,000 invested.

In reality, the perpetrators are allegedly just doctoring all the exchange’s data to make it appear that actual trading is taking place and that its users are benefiting from its sophisticated strategy. Meanwhile, BG Wealth immediately siphons all the money investors have poured into DSJ into its own bank accounts.

Overall, it’s a clear Ponzi scheme since it generates revenue only from new users to pay out older ones. The scam eventually unraveled when various regulators flagged BG Wealth’s activities, and users began having trouble withdrawing their funds. DSJ mysteriously freezes during those attempts, masking the issue as a mere technical glitch rather than a measured exit scam from the culprits.

What’s worse, as the Federal Bureau of Investigation (FBI) seized its platforms, BG Wealth made a last-ditch effort to demand “advanced fees” from users with frozen funds to supposedly help them withdraw their money.

Grounds for the Cease and Desist Order

Bitpinas reported that the Philippine SEC found BG Wealth’s business to be in violation of the Securities Regulation Code (SRC) and the Financial Products and Services Consumer Protection Act (FCPA). The agency used the landmark Howey Test as the basis for the Cease and Desist order, ruling that the company’s lack of registration and license to sell or offer securities in its public offering constituted financial fraud.

Strangely, the SEC’s latest order only focused on the compliance aspect of BG Wealth’s business. Although it mentioned that financial fraud includes deceptive solicitations, such as Ponzi schemes, it didn’t reiterate its earlier findings that the business was operating an elaborate Ponzi scheme.

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