US authorities on Friday charged a British businessman with securities fraud, accusing him of deceiving investors over what turned out to be a fake trading platform for the cryptocurrency Bitcoin.
The Securities and Exchange Commission (SEC) alleged “the clandestine” Renwick Haddow, a UK citizen living in New York, diverted funds invested in a phoney Bitcoin site as well as from a flexible workspace firm Bar Works into accounts in Mauritius and Morocco, totalling $5m.
It said he touted experienced senior executives as behind the operations who turned out to be phantoms, and misrepresented the details and success of both companies.
Andrew Calamari, director of the SEC’s New York office, said: “Haddow created two trendy companies and misled investors into believing that highly qualified executives were leading them to quick profitability.”
“In reality, Haddow controlled the companies from behind the scenes and they were far from profitable.”
Bitcoin Store claimed to be “an easy-to-use and secure way of holding and trading Bitcoin” that had generated several million dollars in gross sales. The SEC alleged that in fact it never had any operations nor generated the gross sales it touted.
In 2015, Bitcoin Store’s bank accounts allegedly received less than $250,000 in incoming transfers, none of which appear to reflect revenue from customers, the SEC said.
Haddow’s investors pumped more than $37m into Bar Works, which claimed to provide workspaces in old bars and restaurants, but in fact “primarily sold leases coupled with sub-leases that together functioned like investment notes”, the SEC said in a statement.
The commission alleged that throughout Haddow was “hiding his connection” to the companies “given his checkered past with regulators in the UK”, where he has faced similar charges for investment schemes.
According to a report in Crain’s, 27 investors from China filed suit in the state supreme court on 16 June seeking repayment of more than $3m invested in Bar Works, which they called a Ponzi scheme.
Another investment group filed a similar case against Bar Works in Florida in recent weeks.
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