A pair of brothers are now in hot water with the US government with criminal charges brought against them for allegedly committing fraud in the Ormeus Coin scheme.
On March 8, the Securities and Exchange Commission (SEC) loaded brothers John Albert Loar Barksdale and sister JonAtina (Tina) Barksdale for violating federal securities laws and allegedly defrauding at least 12,000 "retail investors out of more than $124 million." The Department of Justice (DOJ) arrested John abroad and charged him with wire fraud, securities fraud and conspiracy.
Both Barksdale brothers are US citizens. John, 41, lived in Thailand while JonAtina, 45, was in Honk Kong according to Reuters.
There were two Ormeus Coin (ORME) initial coin offerings (ICOs) beginning in 2017. The SEC complaint specifically states that the Barksdales lied about โthe size, value, and alleged profitability of cryptocurrency mining assets.โ of Ormeus Coin".
ORME is an ERC-20 token and a BEP-20 token found on Ethereum (ETH) and BNB Chain (bnb).
While both brothers created social media posts and videos to promote the project, only John attended road shows and conferences to promote it. SEC Division of Enforcement Associate Director Melissa Hodgman likened John to a "snake oil salesman." She also said that both brothers used "social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal gain."
Hodgman also reaffirmed the SEC's position on scammers in the crypto industry by stating:
"We will continue to vigorously pursue individuals who sell securities in schemes to defraud the investing public no matter what label promoters apply to their products."
Both the SEC and DOJ are basing the fraud charges on alleged misrepresentations the Barksdales told investors about the status of the Ormeus mining operation. The Oremus Coin website states that mining operations for the coin began in November 2017 with physical Bitcoin (BTC), Litecoin (LTC) and Dash (PINCH) mining devices. The Barksdales claimed that the project had invested $250 million in the ORME-supporting mining operation and was generating $5 million in monthly revenue.
The project allegedly misled investors by showing that its vault wallet was worth more than $190 million as of last November. However, the display was allegedly set up through a separate website that displayed the value of an unrelated wallet. The SEC claims that the actual project wallets "were worth less than $500,000."
The Justice Department also stated that the mining operation "never approached anything close to $250 million in value and never produced revenues greater than $1 million in any month."
John, who wrote a Blog The February 26, 2018 post on "Why It's Important to Take Calculated Risks in Life" is still listed on the Ormeus Coin and Ormeus Cash websites as an advisor. A court date will be set while the Barksdales are in custody.
A recent decision by the 11th Circuit Court of Appeals could give the SEC more leverage in this case by allowing prosecutors to use a broader range of evidence. the court reversed a decision by a lower court that prevented prosecutors from including videos to be used in the securities fraud case against BitConnect's founders on February 18.
Related: SEC can't locate BitConnect founder convicted in $2.4B fraud case
The SEC has been aggressive on advertising methods common in the cryptocurrency industry and whether it constitutes securities fraud. Reports emerged on March 3 that the Commission currently has its sights set on non-fungible tokens (NFTs). used for fundraising purposes as traditional values.
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