SEC announced charges over Trade Coin Club’s alleged $295 million bitcoin scheme

SEC announces the Trade Coin Club cases

The U.S. Securities and Exchange Commission announced on November 4, 2022 that it had charged Douver Torres Braga, Joff Paradise, Keleionalani Akana Taylor and Jonathan Tetreault over their alleged roles in Trade Coin Club. The agency described the operation as a crypto Ponzi scheme that collected more than 82,000 bitcoin, valued by the SEC at $295 million when received, from more than 100,000 investors worldwide.

The announcement concerned two civil complaints filed on November 3, 2022 in the U.S. District Court for the Western District of Washington. One named Braga, Paradise and Taylor; the other named Tetreault. That chronology matters: November 4 was the date of the public enforcement announcement, not the complaints’ filing date, and the allegations had not been adjudicated.

What the SEC alleged

The principal complaint said Braga established Trade Coin Club in 2016 as a multi-level marketing program. Investors sent bitcoin and were told that a proprietary trading bot generated profits. According to the SEC, promoters represented that the bot made millions of microtransactions each second and that a stop-loss feature produced minimum daily returns of 0.35%.

The regulator alleged a different flow of funds. Its complaint said investor withdrawals came from later investor deposits rather than trading proceeds. The separate Tetreault complaint put a precise figure on that analysis: 99.96% of bitcoin withdrawals were allegedly funded by other investor deposits. It also said Trade Coin Club collected 82,648 bitcoin from December 2016 through May 2018, worth approximately $295 million when the bitcoin was received, and had more than 100,000 investors worldwide, including at least 2,500 in the United States.

Those figures are the SEC’s allegations and calculations, not independent Coinburn measurements. The $295 million figure is a transaction-period valuation covering receipts between December 2016 and May 2018; it is neither a November 4, 2022 bitcoin valuation nor a measure of recoverable investor losses.

The securities-law theory

The SEC alleged that Trade Coin Club membership interests were investment contracts and therefore securities. The principal complaint accused Braga of violating antifraud and securities-registration provisions; it alleged antifraud, securities-registration and broker-dealer-registration violations by Paradise, and registration violations by Taylor. The agency sought injunctions, disgorgement and civil penalties.

The second complaint alleged that Tetreault sold unregistered securities and acted as an unregistered broker. The SEC said Tetreault agreed to settle without admitting or denying the allegations, subject to court approval. That proposed settlement did not resolve the claims against the other defendants and was not a judicial finding that every allegation was true.

Why the case mattered on November 4

The announcement was consequential because it joined a large alleged bitcoin-denominated offering to a conventional enforcement theory: promises of profits from others’ work, paid promotion and the alleged recycling of new deposits into withdrawals. The SEC also said its staff used blockchain tracing and analytical tools. That showed how a public ledger could support an enforcement investigation without making the underlying fundraising, marketing or custody arrangement safe.

The case also separated three quantities that crypto coverage can blur: bitcoin collected, dollar value when collected and investor loss. The complaints directly supported the first two as agency allegations. They did not establish, as of November 4, 2022, a final loss total, the amount recoverable, or final liability for the contested defendants.

What remained unresolved

As of November 4, 2022, the central record consisted of complaints and an announced proposed settlement. Complaints state a regulator’s case; they are not judgments. The next checks were court approval of the Tetreault settlement, service and litigation progress in the Braga case, and any documented recovery or distribution to investors. None of those later steps should be assumed in this event-date account.