SEC Unseals $12 Million Crypto-Scheme Case After Asset Freeze

The Securities and Exchange Commission announced on June 5, 2020 that it had obtained an asset freeze and other emergency relief against three individuals and two Utah companies accused of operating two cryptocurrency-related investment schemes.

The complaint in *SEC v. Putnam et al.* alleged that Daniel F. Putnam, Jean Paul Ramirez Rico, Angel A. Rodriguez, MMT Distribution LLC and R & D Global LLC raised at least $12 million from more than 2,000 investors in the United States and other countries. The case was filed under seal in the U.S. District Court for the District of Utah on May 7 and unsealed on June 5.

Those figures were SEC allegations, not adjudicated losses or findings of liability as of June 5. The regulator’s announcement established that emergency relief had been obtained, while the complaint described the evidence and legal claims the SEC intended to prove.

Mining interests and trading packages

According to the complaint, Putnam began offering interests in a cryptocurrency mining operation through Modern Money Team in at least July 2017. Investors could purportedly buy a share of its hashing power for as little as $50 under a two-year contract or purchase a complete mining rig with a lifetime hosting contract for $2,000.

The SEC alleged that the mining offering raised approximately $3.25 million from nearly 200 investors. Customers were told that Putnam or personnel he selected would house and operate the equipment. The complaint said one investor who contributed more than $600,000 stopped receiving payouts and had not obtained the machines he believed he had purchased.

The businesses subsequently offered “cryptocurrency trading packages.” Packages generally cost between $20 and $500 and lasted one or two years, according to the complaint. Half of the money was represented as capital for digital-asset trading, while the other half funded commissions within the multilevel-marketing structure.

The SEC alleged that the defendants instead diverted funds to personal expenses and made Ponzi-like distributions to earlier participants. It further alleged that investor account records displayed a combined 2,061.2951 bitcoin in November 2019, although records obtained from Bitfinex showed that the account attributed to Ramirez never held more than 50 bitcoin at one time and had closed around May 2019. Those quantities came from the SEC’s investigation and were not independently reconstructed from public blockchain data.

An earlier warning had identified one operation

The complaint connected Modern Money Team with later names including Eyeline Trading and WealthBoss. That history had already produced a public regulatory warning: on October 29, 2018, the British Columbia Securities Commission said Eyeline Trading was advertising bitcoin trading packages promising a daily return of 0.66% to residents of the province.

The Canadian regulator said Eyeline Trading and the related Eyeline Business Development were not registered to trade or advise on securities or exchange contracts in British Columbia. That warning did not prove the broader allegations later brought by the SEC, but it independently confirms that one identified operation and its advertised return claim were visible to regulators well before the U.S. case was unsealed.

What the case meant on June 5

The SEC charged the defendants with violations of federal securities antifraud provisions. It also accused Putnam, Ramirez and MMT Distribution of offering unregistered securities. Beyond the emergency relief, the agency sought permanent injunctions, disgorgement with prejudgment interest and civil penalties.

The action illustrated how securities regulators approached crypto-branded products according to their economic structure rather than their labels. The SEC alleged that customers supplied money while relying on the defendants to operate mining equipment or conduct trading for profit—features the complaint characterized as securities offerings.

The asset freeze did not establish that every cryptocurrency mining contract, trading service or multilevel-marketing business was unlawful. Nor did it decide the defendants’ liability. Its immediate significance was narrower: the court had restricted assets while the SEC pursued allegations that crypto terminology and account displays had been used to sell investments and conceal the handling of customer funds.