SEC Files Fraud Suit Against Bitcoin Startup Owner

ADVERTISEMENT
The US Securities and Exchange Commission has filed fraud charges against a UK citizen accused of bilking the investors of a bitcoin startup.
According to court documents filed today, the SEC accused Renwick Haddow of misleading stakeholders who bought into two companies he founded: Bitcoin Shop Inc., which was advertised as a platform for trading bitcoin, and Bar Works, a co-working space company akin to WeWork. Concurrently, the US Attorney's Office for the Southern District of New York is also pressing charges against Haddow.
The SEC alleged that Haddow, who resides in New York, misrepresented key factors about the company's operation and the background of senior executives of Bitcoin Store Inc. who, according to the statement, "do not appear to exist" in an attempt to to allure potential investors.
Haddow – who the SEC said created a broker-dealer firm, called InCrowd Equity, without registering with the agency – was further accused of diverting funds raised from investors to bank accounts held outside of the country.

The SEC said today in a release:
"Haddow allegedly diverted more than 80 percent of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco."
In court documents, the SEC noted that Haddow had previously received an eight-year disqualification in the UK from working as the director of a company, a ban stemming from his involvement with a firm called Branded Leisure plc.
The SEC also alleged that fake identities were employed by the accused firms. The court documents noted that the CEO of the startup is named Gordon Phillips, who appeared in promotional videos for the service. According to a LinkedIn page, the profiled person used to work for HSBC in London and Hong Kong, as well as Deutsche Bank.
Yet the agency alleged that Gordon Phillips "never worked for HSBC or Deutsche Bank" and it believes the name is a fictitious one.
Earlier this month, New York business publication Crain's reported on the collapse of Bar Works, noting that the firm is the subject of an investigation by the Federal Bureau of Investigation as well as two investor-led lawsuits. A report in January, from The Real Deal, first suggested that fake identities were employed.
The website www.bitcoinstore.global appears to be connected to the scheme. A press release published on the site in July 2015 showed that Bitcoin Store Inc., the exact name of the entity charged by the SEC, was trying to issue a convertible promissory notes with a coupon of 8% per annum in order to raise $1.825 million.
Image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.
Credit: coindesk