The U.S. Securities and Exchange Commission (SEC) moved to halt an allegedly fraudulent digital asset investment fund run by two Pennsylvania brothers.
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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.