The US Securities and Exchange Commission (SEC) filed fraud charges on Friday against Renwick Haddow, a British citizen living in New York, for allegedly duping investors in two companies. The SEC alleges that he created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws.
Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc. According to the SEC’s complaint, materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist. The materials also misrepresented other key facts about both companies’ operations.
Haddow allegedly diverted more than 80% of the funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco.
“As alleged in our complaint, Haddow created two trendy companies and misled investors into believing that highly-qualified executives were leading them to quick profitability. In reality, Haddow controlled the companies from behind the scenes and they were far from profitable,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.
The SEC alleges that materials provided to Bitcoin Store investors claimed it was “an easy-to-use and secure way of holding and trading Bitcoin” and had generated several million dollars in gross sales. In fact, the SEC alleges that Bitcoin Store has never had any operations nor generated the gross sales that it claimed.
In 2015, for example, Bitcoin Store’s bank accounts allegedly received less than $250,000 in incoming transfers, none of which appear to reflect revenue from customers. According to the SEC’s complaint, the corporate address used for Bitcoin Store was Haddow’s residential address minus the apartment number.
The SEC has obtained an emergency asset freeze against all defendants and relief defendants in the case.
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