SEC subpoenas crypto trader accused of $7M ‘Ponzi-like’ scheme

Legal papers representing SEC subpoena for bank details belonging to crypto trader Shawn Cutting

A self-styled crypto trader won’t duck an SEC subpoena after courts ruled his bank data could prove what happened to $7 million worth of investor cash.

Shawn Cutting raised the funds from 450 individuals by claiming to be a seasoned financial advisor, reports Law 360.

Cutting did so between October 2017 and May 2020, and promised to put the money to work trading crypto via his firm Crypto Traders Management.

But in an emergency enforcement action filed in Idaho federal court in March, the SEC alleged Cutting had no related experience.

The agency claimed Cutting at times touted gains exceeding 50% per month.

Meanwhile, Cutting was spending dough on home improvements, new cars, his daughter’s wedding, as well as gold and silver coins.

Crypto trader, Ponzi payments

The SEC reportedly went so far as to label Cutting’s supposed hedge fund “Ponzi-like,” alleging he:

  • Funnelled $760,000 from new investors to existing shareholders.
  • Emailed “fictitious updates” about the progress of the fund.
  • Refused to withdraw funds when investors demanded their money.

Authorities requested access to Cutting’s Glacier Bank account in December last year.

However, Law360 noted Cutting felt he shouldn’t be forced to reveal his data as it was irrelevant to any legitimate law enforcement inquiry.

Such minor setbacks are completely normal for a crypto trader, said Cutting. (Source: SEC).

Turns out, Idaho courts saw things differently, and the SEC can now determine if Cutting moved Crypto Traders funds between various bank accounts — including his own — or used company cash for personal expenses.

Cutting denied the claims and blamed much of the scandal on mistakenly auto-generated reports and bungled calculations.

Market fluctuations, theft, hacking, and bankrupt crypto platforms — events out of the control of Crypto Traders led to the cryptocurrency involved in swing trading to become a total loss.

Shawn Cutting in an April court filing.

[Read more: SEC likely finds MetaKovan’s Beeple-backed crypto very ‘interesting’ — here’s why]

Cutting and his wife are reportedly seeking relief from a $13.8 million asset freeze in March to file for Chapter 11 bankruptcy.

Join our newsletter and get crypto news in your inbox

Newsletter

© 2021 Protos