Federal securities regulators have filed suit against Donald Basile, a crypto executive accused of raising roughly $16 million from hundreds of investors through a digital token scheme built almost entirely on false promises, officials said.
The US Securities and Exchange Commission(SEC) lodged the complaint Friday in the US District Court for the Eastern District of New York, alleging that Basile ran the operation through two companies under his control, Monsoon Blockchain Corp. and GIBF GP Inc., across a nine-month window in 2021. The instrument used to draw in investors was a series of Simple Agreements for Future Tokens linked to a crypto called Bitcoin Latinum.
Central to the pitch, according to the SEC, was the claim that Bitcoin Latinum was an asset-backed, insured cryptocurrency. Investors were told their exposure was protected, a representation that regulators say had no basis in reality. No insurance company ever issued a policy covering the token or any part of the SAFT offering, according to the complaint.
As per SEC, Basile allegedly assured investors that the capital they committed would go toward reinforcing the token’s underlying value. What actually happened to those funds tells a different story. Further, the regulator alleges millions were quietly diverted to personal expenditures, including real estate purchases, credit card payments, and the acquisition of a horse that cost $160,000.
Regulators are now seeking the full range of available remedies which includes permanent injunctions against further violations, repayment of allegedly ill-gotten gains with prejudgment interest, civil penalties, and a conduct-based injunction that would bar Basile from participating in any future securities offerings, with narrow exceptions for personal account transactions. The SEC is also pursuing an officer-and-director bar that would shut him out of leadership positions at public companies.
