The US Securities and Exchange Commission (SEC) has filed charges against Cooper J. Morgenthau, a former Chief Financial Officer (CFO) of a Special Purpose Acquisition Company (SPAC), African Gold Acquisition Corp for masterminding a fraudulent scheme that defrauded its employer and employees about $5 million.
The SEC filed the charges in the United States District Court of the Southern District of New York and according to the filed document, Morgenthau was reported to have orchestrated the crypto crime between June 2021 to July 2022.
The complaint alleged that Morgenthau withdrew about $1.2 million from the company’s account and later secretly covered up his tracks by falsifying the company’s account statement. He then provided those forged statements to African Gold’s accountants and auditors to prepare African Gold’s SEC filings.
In addition to the above, Morgenthau was also alleged to have solicited about $4.7 million in funding from investors to create two SPAC firms called Strategic Metals Acquisition Corp I, and Strategic Metals Acquisition II. However, Morgenthau used the funds for his benefit and injected some cash into African Gold to cover up his stealing.
After African Gold’s yearly audit, Morgenthau began transferring back the money from the company. He then used the funds to trade crypto assets securities. Morgenthau exhausted African Gold’s fund in August 2022 and his scheme was exposed after he was unable to pay vendors for work done in the firm. Morgenthau was eventually sacked on August 26, 2022.
SEC Intensifies Security Efforts
The announcement comes at a time when regulators are enacting policies and laws to protect investors after many have lost billions of dollars due to the failure of cryptocurrency exchange platforms, most recently the FTX exchange.
In December 2022, SEC announced that it would intensify efforts into investigating the proof-of-reserve reports published by crypto exchange firms, to protect investors from investing in exchanges that publish false information.
While in Thailand, the SEC has said it would establish strict regulatory procedures aimed at protecting the digital assets of investors. It is worth noting that the collapse of the Celsius Network had a significant impact on Thai investors who used Zipmex, a local exchange.
Furthermore, the SEC is attempting to establish rules for cryptocurrency advertising. According to the report, celebrities who promote cryptocurrency may be seen as contributing to the hype, which may lead to poor investment decisions.
