CryptocurrencyIndustry

U.S. Securities and Exchange Commission Filed Suit Against Blakstad For Allegedly Fraudulent Crypto Mining

The U.S. Securities and Exchange Commission (SEC) pressed charges against Donald Blakstad for scamming a number of investors through an allegedly fake crypto mining operations.

Blakstad was alleged of bilking more than $3.5 million through three parties, including Energy Sources International (ESI), a vehicle parts holding firm, and an oil and gas company.

Additionally, the specific crypto mining operation took about $550,000 from other separate investors. According to this investors, Blakstad told them that their capital would be covering the equipment costs.

But, SEC alleged Blackstad for using half of the cash for himself at hotels, restaurants, and casinos. The SEC further alleged Blakstad by issuing each the fives investors worth $60,000 checks as ROI.

If you are not aware, in July, he was previously charged in a separate trading scheme worth $6.2 million.

Blakstad created a fraudulent scheme to entice people to invest in exchange of reputed crypto mining shares. He is also the principal and owner of Midcontinental Petroleum Inc., a company that invests in the oil and gas company, and Xact Holdings, which acquires a Canadian manufacturer of industrial vehicle parts. He used these the three companies as part of his allegedly fake cryptocurrency mining pools, which shill information to attract plenty of investors into the operation that never existed.

Investors Paid for Crypto Mining Operation That Never Existed

According to SEC, Blakstad sent emails to investors saying that Energy Sources International “developed a world-class data center for cryptocurrency mining.”

Blakstad told these investors that he “offers a unique opportunity for people looking to make large investments in the crypto currency mining space.” He also pull off the fraud through selling of investment contracts representing company shares he established dedicated for crypto mining.

“We offer investors the ability to purchase the mining equipment and lease back to ESI. Or to make an equity investment in the company,” Blakstad’s other convincing lines.

The allegedly fake crypto mining operation resulted to paying of investors for equipment that never existed. Blakstad spent the money for his personal expenses instead, including casino, hotel, restaurants, and more.

Now, SEC demands for penalties, despite having no guarantee for paying back the investors. If Blakstad is convicted with fraud, he could face a fine of $1 million and spend time in prison up to 20 years. As for selling unregistered securities, he could face a $250,000 fiscal penalty and a maximum of 5 years in prison.

Not Blakstad’s First Offense

Apart from the recent charges Blakstad is facing, he was also charged by SEC for insider trading scheme in July 2019.

The SEC stated that Blakstad paid accountant Martha Patrica Bustos to get private information on Illumina Inc. Then, the information he received from the accountant was used to gain profit in the stock market.

As other folks remember, Wong Ching Kit was arrested for participation in a fraudulent cryptocurrency mining operation. Now, it was Blakstad who’s on the table.

Marjory Lewis

Marjory is a science graduate with interest in new technological innovations. She has been attracted to blockchain from the very beginning and covers bitcoin and blockchain news for Bitcoin Journal.

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