The Securities and Exchange Commission has accused a Tampa-based businessman with fraud related to a cryptocurrency company he ran.
Alexander Elbanna, whose LinkedIn profile lists him as a Tampa Bay resident, founded Digital World Exchange, where federal agents say he engaged in a "fraudulent scheme involving unregistered offers and sales of crypto asset securities called 'DWE' and 'BPC.'" DWE is based in Tampa, officials say in court documents.
Elbanna and one of his entities also allegedly made fraudulent private offers and sales of equity securities, the SEC says in a Friday civil court filing in the U.S. District Court for the Middle District of Florida in Tampa.
In total, investors lost $1 million, the SEC says, defrauded when Elbanna pulled their assets out. Elbanna did not respond to a message from the Business Observer for comment.
The alleged scam occurred between February 2018 and April 2021, the SEC says, when Elbanna founded and promoted three separate business enterprises: Digital World Exchange LLC, Boostedpro LLC and D.W. Exchange LLC.
"Each of these businesses allegedly included a proposed crypto asset trading platform and an 'in-house exchange token' or crypto asset security whose value purportedly depended on Elbanna's successful launch of the proposed trading platform," the SEC says.
To attract investors to purchase his crypto coins, as well as equity securities in the corporate entity that issued DWE, Elbanna and his three entities "made materially false and misleading statements to investors concerning Elbanna's level of technological experience and wealth, the risks involved in the investment, and the operation of the associated crypto asset trading platform," authorities allege. (Elbanna's LinkedIn page says he was a software programmer for the National Security Agency, and earned an MBA from Florida International University.)
One example the SEC gave was Elbanna assured investors his coins were backed up by his own gold, silver, or Bitcoin collateral.
"In a January 2019 video, Elbanna stated that he had backed DWE with $10 million worth of his own (Bitcoin)," the SEC says.
But Elbanna never deposited $10 million worth of his own Bitcoin, and never held more than $37,000 worth of it. Elbanna and DWE LLC purchased less than $100,000 in gold and silver as purported collateral using investor funds.
"They stored the gold and silver not in a bank or other certified custodial facility, but in a closet in Elbanna’s home," the SEC says.