The Securities Exchange Commission (SEC) is taking an alleged scammer to task over fraudulent crypto mining activity.
The SEC filed a complaint today against Donald G. Blakstad for raising about $3.5 million from at least 14 investors via allegedly fraudulent securities offers.
The SEC said Blakstad raised the funds through three of his companies: an oil, gas and alternative energy firm; a company formed to acquire a Canadian car parts manufacturer; and a "purported" cryptocurrency mining operation.
Blakstad told investors their cash would be used for "start-up costs" including the purchasing of equipment for the mining operation, according to the SEC's complaint. However, the regulator said Blakstad used the funds as "his own personal piggybank," and used some of the funds to compensate the person who connected him with his investors.
The mining company, Energy Sources International Corporation, was first sprung up in Nevada in 2015 with Blakstad as its President, and allegedly its only employee.
From December 2017 to May 2018, Blakstad purportedly sold securities in the company to at least five people, totaling $550,000. The SEC alleged he then used at least $270,000 of these funds for personal expenditures and issued nearly $60,000 in checks to investors as return on investment despite never turning a profit.
The complaint calls for Blakstad to repay any ill-gotten gains and pay civil penalties, as well as barring him from any officer or director position with any issuer of certain registered securities.