SEC Wins $1.1 Million Judgment Against Crypto Fraudster Keith Crews

The U.S. Securities and Exchange Commission (SEC) has secured a significant victory in its ongoing efforts to combat cryptocurrency fraud. In a recent court case, the SEC was awarded $1.1 million in penalties against Keith Crews, an individual accused of orchestrating a crypto fraud scheme. The case took a decisive turn when Crews failed to respond to the SEC's allegations, leading to a default judgment in favor of the regulatory body.

The SEC initially filed a lawsuit against Crews in August 2023, alleging that he had engaged in fraudulent activities related to cryptocurrency. The absence of Crews in court resulted in a default judgment, where U.S. District Judge Tiffany R. Johnson ruled in favor of the SEC. This judgment not only highlights the SEC's commitment to protecting investors from fraudulent schemes but also underscores the legal consequences for those who fail to defend themselves against such allegations.

Judge Johnson ordered Crews to pay financial penalties totaling over $1.1 million. This includes disgorgement of $530,000 in net profits from his alleged misconduct, prejudgment interest of almost $51,000, and a civil penalty of $530,000. Additionally, Crews is permanently banned from future violations of securities laws, a significant blow to his potential involvement in any future financial activities.

The SEC alleged that Crews carried out a crypto fraud scheme through his companies, Four Square Biz and Stem Biotech, between October 2019 and May 2021. The regulator claimed he raised at least $800,000 from approximately 200 investors through the sale of a “purported crypto asset security” named “Stemy Coin.” Many of the investors were solicited through relationships in African-American and church communities, highlighting the targeted nature of the fraud.

The SEC accused Crews of making false claims to investors, such as the token being backed by stem cell technology and hard assets like gold. He also claimed that his company had existing labs, products, and a track record of delivering stem cell treatments. However, the SEC's investigation revealed that these claims were false. Crews and his entities had no existing stem cell technology, products, or operations, and there was no partnership with the claimed entities.

The complaint alleged violations of multiple federal securities laws, including Securities Act fraud provisions, Exchange Act fraud provisions, and registration violations. This case represents a rare crypto-related victory for the SEC, which has wound down its crypto enforcement actions under the Trump administration this year. The judgment serves as a clear message to potential fraudsters that regulatory bodies are vigilant and will take decisive action against those who engage in deceptive practices.

The absence of Crews in court and the subsequent default judgment raise questions about the effectiveness of regulatory enforcement in the cryptocurrency industry. While the SEC's victory is a significant step forward, it also highlights the challenges faced by regulatory bodies in tracking down and prosecuting individuals involved in fraudulent activities. The case against Crews serves as a reminder that regulatory enforcement is an ongoing process that requires continuous vigilance and proactive measures to protect investors and maintain the integrity of the financial markets.

The SEC's success in this case is a testament to its dedication to safeguarding the interests of investors. The regulatory body's ability to secure a default judgment against Crews demonstrates its commitment to holding fraudsters accountable and ensuring that the cryptocurrency industry operates within the bounds of the law. As the industry continues to evolve, the SEC's actions serve as a crucial reminder of the importance of regulatory oversight in maintaining the integrity of the financial markets.