On Tuesday, the Securities and Exchange Commission (SEC) filed a civil complaint against U.S. citizens John and JonAtina (Tina) Barksdale, seeking relief from alleged securities law violations in connection with the unregistered and fraudulent offering of a digital token called Ormeus Coin.
The brother, a full-time resident of Koh Samui, Thailand and his older sister, a Hong Kong resident, allegedly siphoned $124 million from investors through misrepresentations parroted by John Barksdale at roadshows and through social media posts, YouTube videos, press releases, and other promotional materials produced by Tina Barksdale. The complaint specifies that the defendants not only sold the unregistered digital token, touting it with exaggerated metrics, but also sold “subscription packages” through a multi-level marketing business called Ormeus Global.
The Southern District of New York complaint further alleges that the defendants misrepresented the token’s viability by falsely asserting that Oremus Coin was backed by one of the largest crypto mining operations in the world. In reality, the venture abandoned mining operations in 2019 after generating less than $3 million in revenue. Despite this, the Barksdales purportedly stated that Ormeus Coin had a $250 million crypto mining operation and was generating $5.4 million to $8 million per month in revenue.
As for Ormeus Global, “[p]romotional materials for the subscription packages promised investors that the digital asset trading system was a proven program through which investors could earn passive returns of up to 160% of their initial investment,” the complaint says. However, the SEC avers that the trading system was not proven and was still in development for months after the multi-level marketing scheme started selling subscription packages.
The complaint asserts that the defendants used the ill-gotten money for their own personal benefit including for travel and to purchase real estate. The SEC states three claims for relief for purported abuses of the Securities Act’s registration and anti-fraud provisions. The complaint seeks injunctive relief, civil penalties, and disgorgement.
Notably, and according to the SEC’s accompanying press release, the U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against John Barksdale in a parallel proceeding.
