The SEC alleges that the defendants did not use the assets for the promised trading and that the displayed profits were fabricated. Instead, they misappropriated most investor assets, while returning up to $25 million to wallet addresses likely associated with investors in what the agency calls Ponzi-like payments.
Turning Public Filings Into Credentials
BG Wealth filed a Form ADV claiming to be an exempt reporting adviser, while DSJ Exchange filed a Form D announcing a purported $100 million exempt securities offering, the complaint says. The SEC alleges that BG Wealth’s filing misrepresented its auditor and business premises, while DSJ’s filings contained false contact information.
The defendants and their promoters directed investors to the filings on SEC websites as supposed evidence of registration, according to the complaint. They also displayed fabricated registration certificates bearing the SEC’s seal and identification numbers linked to those filings.
Those filings did not establish SEC licensing or approval. As the agency explains in an investor alert, exempt reporting advisers are not registered with the SEC, and the agency does not issue registration certificates. The SEC said it has removed BG Wealth’s Form ADV and DSJ Exchange’s Form D from its website.
The complaint says DSJ Exchange eventually blocked withdrawals altogether. Investors were then told to pay a “tax” to unlock their accounts or deposit more assets to move to a new platform, HQI Exchange. Investors who paid still could not withdraw their money, the SEC alleges.
Both entities face antifraud claims under the Securities Act and the Exchange Act. BG Wealth also faces claims under Sections 204(a) and 207 of the Investment Advisers Act for failing to make records available and making false statements in its filing.
The SEC seeks permanent injunctions, the return of ill-gotten gains with prejudgment interest and civil penalties. It also asks the court to bar BG Wealth and those acting with it from filing Forms ADV as an exempt reporting adviser.
