U.S. regulators have shuttered an offshore algorithmic trading scheme that allegedly took in at least US$125 million from investors.
The U.S. Securities and Exchange Commission (SEC) announced that a U.S. federal court imposed a temporary restraining order and asset freeze against three firms — Mediatrix Capital Inc., Blue Isle Markets Inc. and Blue Isle Markets Ltd. — and the three people who ran the firms amid allegations that they operated a fraudulent international trading program.
The SEC alleged that, starting in 2016, Bahamas-based Mediatrix raised more than US$125 million from investors, claiming that their money would be invested in a highly profitable trading strategy that purportedly never had a down month.
“In truth, the complaint alleges, the defendants’ trading strategy consistently lost money — losing more than US$18 million from its trading in 2018 alone,” the regulator said.
Additionally, the SEC alleged that the defendants “misled investors by falsifying account statements and making Ponzi-like payments, all while misappropriating more than US$35 million of investor money for defendants’ personal use, including to purchase luxury properties and vehicles.”
The allegations have not been proven.
The SEC’s complaint, which was filed in federal district court in Colorado, charges all defendants with various securities law violations, and it has charged 20 relief defendants who allegedly received profits from the fraud.