A brother and sister team will be charged with wire fraud, securities fraud, and conspiracy in connection with the Ormeus Coin ICO.
The U.S. government has taken legal action against a pair of siblings for allegedly engaging in fraud in the Ormeus Coin scheme.
On Mar. 8, the Securities and Exchange Commission (SEC) charged siblings John Albert Loar Barksdale and sister JonAtina (Tina) Barksdale with violating federal securities laws and allegedly defrauding at least 12,000 “retail investors out of more than $124 million.” John was arrested abroad by the Department of Justice (DOJ) and charged with wire fraud, securities fraud, and conspiracy.
Both of the Barksdale siblings are citizens of the United States. The 41-year-old, John, lived in Thailand, and the 45-year-old, JonAtina, lived in Hong Kong, according to Reuters.
There were two Ormeus Coin (ORME) initial coin offerings (ICOs) starting in 2017. A statement in the SEC complaint specifically states that the Barksdales misrepresented "the size, value, and purported profitability of Ormeus Coin's cryptocurrency mining assets.".
The ORME token is a BEP-20 token as well as an ERC-20 token based on Ethereum (ETH) and the BNB Chain (BNB).
Although both siblings contributed to social media posts and videos about the project, only John participated in roadshows and conferences to promote it. SEC Associate Director Melissa Hodgman compared John to a snake-oil salesman and said both siblings had misled retail investors using social media and promotional websites.
Hodgman expressed the SEC's views on fraudsters in the crypto industry and stated:
"We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products."
The SEC and DOJ are accusing the Barksdales of fraud for allegedly misrepresenting the condition of the Ormeus mine. According to the Oremus Coin website, mining operations for the coin began in November 2017 with actual Bitcoin (BTC), Litecoin (LTC), and Dash (DASH) mining devices. The Barksdales claimed that the project had invested $250 million into the mining operation backing ORME and that it was generating $5 million in monthly revenue.
Investors were allegedly misled as to the value of the vault wallet by showing it to be greater than $190 million as of Nov. This, however, was allegedly done through a separate website displaying the value of an unrelated wallet. The SEC claims that the project’s real wallets “were worth less than $500,000.”
In addition, the DOJ stated that the mining operation "never reached a value of at least $250 million and never produced revenues exceeding one million dollars in any month."
John, who wrote a blog post on February 26, 2018, entitled "Why Taking Calculated Risks In Life Is Important" is still listed as an advisor on the Ormeus Coin and Ormeus Cash websites. A court date will be set while the Barksdales are held in custody.
A recent decision by the 11th Circuit Court of Appeals could give the SEC more leverage in this case as it allows prosecutors to use a broader range of evidence. An inferior court had denied prosecutors the right to use video evidence in the securities fraud case against BitConnect's founders until the court reversed that edict on February 18.