Lithuanian Man Charged with Orchestrating $4 Million Offering Fraud Involving Crypto Assets

The Securities and Exchange Commission charged Darius Karpavicius from Lithuania with orchestrating a fraudulent offering that raised $4 million in total from about 64 retail investors. Karpavicius is accused of using a large portion of the money for his personal gain, including cash withdrawals from banks and investing in crypto assets.

Karpavicius began offering investors fraudulent mutual funds at the end of 2021, according to SEC’s complaint. The SEC complaint states that these offerings were advertised through websites, press release and internet ads, which all contained false and misleading statements. Materials falsely claimed the mutual funds were being managed by professionals who had experience, and that they had produced high-yielding returns over a number of years. Investors were told to send their money to entities controlled by Karpavicius, HMC Trading, LLC, and HMC Management, LLC. SEC, however, alleges that these managers do not exist and their biographies have been fabricated. Neither TBO Capital Group, nor Gray Capital Group has made any investments. Karpavicius’s entities and the entire operation were allegedly intended to be enriched by the fraud.

The SEC has brought a lawsuit against Karpavicius as well as HMC Trading LLC and HMC Management LLC before the United States District Court for Southern District of New York. The SEC filed a complaint against them alleging that they violated federal securities laws relating to registration and fraud. DK Auto LLC, a relief defendant, is also named. The SEC seeks permanent injunctive remedies, disgorgement and prejudgment interests, civil penalties, as well as disgorgement from the relief defendant.

Benjamin Vaughn is leading the SEC investigation, assisted by Katherine Stella and Andrea Fox. The Office of Investigative and Market Analysis of the Division is also providing assistance. Peter Rosario George Bagnall Stacy L. Bogert supervises the investigation. Peter Lallas will lead the litigation, and James Connor will supervise it.

In light of the case, SEC’s Office of Investor Education and Advocacy issued an Investor Alert warning investors of scams that involve websites that promote high-return investment programs with little or zero risk.

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Securities and Exchange Commission is the regulatory agency that enforces and oversees securities laws in the United States. Its main goal is to protect investors and maintain fair, efficient, and transparent markets. This is achieved by the SEC through regulation of the securities industry, transparency and disclosure and enforcement of laws against fraudulent activity on the financial markets. The commission oversees securities exchanges, brokerages, investment advisors and other market participants. SEC regulates to promote investor confidence and the integrity of U.S. markets.

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