SEC Claims Brothers Lied About Digital Asset Fund Performance, Used Profits for Personal Use

The U.S. Securities and Exchange Commission moved Friday to halt an allegedly fraudulent digital asset investment fund run by two Pennsylvania brothers.

AccessTimeIconJun 19, 2020 at 6:04 p.m. UTC
Updated Sep 14, 2021 at 8:54 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) moved to halt an allegedly fraudulent digital asset investment fund run by two Pennsylvania brothers.

The SEC announced Friday it had filed a temporary restraining order and asset freeze against Sean and Shane Hvizdzak and their corporate entities, alleging the brothers stole millions from victims who thought they were investing in high-growth crypto opportunities.

Investors had been told they were getting in on a high-growth fund that doubled its money in a single quarter and grew an additional 90% the next, according to the SEC. The Hvizdzaks ran multiple firms, including "Hvizdzak Capital Management" (HCM), "High Street Capital" (HSC) and a fund, High Street Capital Fund USA, LP.

According to the SEC, the Hvizdzaks have moved nearly $26 million into personal accounts from the $31 million the investment firm HCM has held since 2019. They alleged that bank records document at least $3 million in misappropriations and suggest millions more.

A court filing claims the two used their personal Gemini accounts to convert dollars to digital asset equivalents, with these funds being transferred "to various custodians and trading platforms including platforms outside the [U.S.] and to unattributed addresses on multiple blockchains."

The filing alleges at multiple points the two diverted investor funds to personal accounts.

The charges and legal action may complicate the narrative of Shane Hvizdzak, a one-time professor at local universities and lecturer at crypto events staged at Harvard and MIT. In a bio for one webinar held at Harvard, he is described as a "successful cryptocurrency trader and algorithm engineer that has generated over 1,400% in profit" in a five-month span.

The legal action comes a day after Bradford, Pa., residents watched FBI agents converge on the office of High Street Capital LLC.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.