The Trading and Sale of Two New Crypto Assets – Manipulation and Fraud Charges

Crypto assets continue to be a controversial topic. Many believe that crypto can be a real source of value; others do not. Congress has considered if crypto assets should be regulated by an agency; despite years of consideration, regulation has yet to emerge. Now, of course, the question will essentially be tabled until after the election. Nevertheless, the Commission continues to debate questions about the assets while the enforcement division brings actions. The Commission’s latest case in this area centers on transactions involving two different crypto assets. The latest case in the area is SEC v. Vy Pham, Civil Action No. 1:24-cv-12588 (D. Mass. Filed Oct. 9, 2024).

Defendant Vy Pham is a citizen of Vietnam who resides in Los Angeles. She holds herself out as the leader of a project related to Robo Inn and as the CEO of Robo Global Investment PTE, Ltd.

In the spring of 2021 Defendant Pham participated in the launch of Saitama Inu, a crypto asset offered and sold as a security. Those involved with the promotion of the asset claimed it would create wealth through passive income. They also claimed that it would promote financial literacy and global financial well-being. Ms. Pham and the others promoting the crypto asset then engaged in a series of actions designed to increase the price and trading volume. Shortly thereafter Defendant Pham had a falling out with the leadership team. Members of that team were also named in a Commission enforcement action, SEC v. Russell Armand, et. al (D. Mass 2024).

Later in 2021 Ms. Pham launched another crypto asset – the Robo Inu Finance token. It was inspired by a NASA plan to launch Robo dogs to Mars. There was no real market for the asset. Defendant hired Gotbit Consulting LLC to provide market making services. They did. A process was used to create the illusion of public interest in Robo Inu. Trading in the assets was designed to attack public interest in the assets. It did. There was wash trading to induce public interest. Those efforts began in February 2022 and continued through June of 2023. Social media and other, similar avenues, were used to promote the assets. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a)(1) & (3) and Exchange Act Section Sections 9(a)(2), 10(b) and Rules 10b-5(a) and (c). See Lit. Rel. No. 26153 (Oct. 15, 2024).