The SEC has sued John Barksdale and his sister JonAtina “Tina” Barksdale over Ormeus International fraud.
The regulator alleges the Barkdales stole over $124 million via Ormeus International’s ORME cryptocurrency.
BehindMLM reviewed and reported on Ormeus International’s securities fraud in June 2017.
The SEC’s criticism particulars fraud by the Barkdales from June 2017 to April 2018.
Defendants John and Tina Barksdale fraudulently supplied and bought unregistered securities within the type of subscription packages in Ormeus International, S.A.
Additionally beginning in June 2017 … Defendants fraudulently supplied and bought unregistered securities within the type of the digital asset Ormeus Coin.
Neither the subscription packages nor Ormeus Coin was ever registered with the Fee as a safety – though they need to have been below securities legal guidelines.
John Barksdale is a US citizen previously residing Thailand. He has been arrested in parallel felony proceedings.
Barksdale is believed to have been or be within the means of being extradited again to the US.
Tina Barksdale is a US citizen residing in Hong Kong.
She is the sister of John Barksdale and with him managed the operations of Ormeus International and Ormeus Coin.
Tina Barksdale labored in Ormeus’ Hong Kong workplace, was liable for coordinating the advertising movies the corporate used to trend itself as a respectable firm, and managed financial institution accounts for the enterprise.
Of the 2 John Barksdale was very a lot the face of Ormeus International. I hadn’t heard of Tina Barksdale till overlaying the SEC’s proceedings right now.
Ormeus International’s unique Ponzi ruse was the standard buying and selling bot mannequin.
By way of their “B2x89” bot, Ormeus International pitched a 160% ROI.
Opposite to … representations … (Ormeus International’s) buying and selling system was not a confirmed system and was nonetheless in improvement for months after Ormeus International began promoting subscription packages.
Consequently Ormeus International started pushing crypto mining, one other frequent Ponzi ruse.
Defendants represented to buyers that Ormeus Coin would help its worth by holding different digital belongings earned via its digital asset mining operation.
They instructed buyers that Ormeus Coin would completely place 40% of the earnings of the digital asset mining enterprise into digital asset wallets often known as the “Ormeus Reserve Vault”, or “ORV”, to help the worth of Ormeus Coin, which additionally made the Ormeus International packages extra engaging to buyers.
Whereas Ormeus International did the truth is have interaction in mining, it was nowhere close to sufficient to maintain the Ponzi scheme.
Ormeus Coin mined digital belongings for lower than a yr., from February 2018 till January 2019.
In that point, your complete operation generated lower than $3 million in whole income.
However, Defendants misrepresented at numerous occasions that the operation was producing $5.4 million to $8 million income every month.
Defendants additionally misrepresented that Ormeus Coin has $30 million, $35 million, and $250 million price of digital asset mining tools at a time when it had lower than $1 million of kit in precise operation.
Defendants struggled to maintain the tools operational and breaking even.
Ormeus International associates had been instructed mining proceeds “can be used to buy extra digital asset mining tools and know-how”. That didn’t occur.
In truth by the top of Ormeus International’s mining run, the corporate was producing losses.
From March 5 to June 1, 2018, the worth of bitcoin dropped in worth from roughly $11,600 per bitcoin to $7500, or a lower of 35%.
On or about Might nineteenth, 2018, the corporate internet hosting the digital asset mining tools in Utah despatched an electronic mail to Defendants detailing the operation’s mining income, bills, and earnings.
Within the previous 42 days, Ormeus Coin had income of lower than $9000 from mining digital belongings.
On or about June 1, 2018, as the worth of bitcoin continued to lower, Ormeus Coin’s mining tools in New York and Utah was turned off.
Defendants and Ormeus Coin made no disclosures to buyers and didn’t right any prior misstatements about its mining success up to now.
On or about November 12, 2018, Ormeus Coin’s mining tools in Utah was turned again on.
From November 12, 2018 via January 12, 2019, Ormeus Coin’s mining tools produced losses of about $115,000.
On or about January 2019, Ormeus Coin’s mining tools in Utah was completely switched off and put into storage.
None of those occasions had been ever disclosed to buyers.
In a whitepaper revealed in April 2019, 4 months after the mining tools had been turned off, Ormeus International maintained it had
one of many largest digital asset mining operations on the planet (and) that it’s actively mining digital belongings in North America.
To idiot buyers, the Barksdales displayed a bitcoin pockets stability on ORV’s web site.
This pockets belonged to an “unrelated third celebration” and had nothing to do with Ormeus International.
As of November 2021, the stability mirrored on ORV’s web site equalled over $190 million.
In contrast, the belongings within the precise ORV digital asset wallets had been price lower than $500,000.
Upon studying of the SEC’s investigation into them in December 2021, the Barksdale’s pulled entry to ORV’s web site.
One other misleading advertising tactic employed was a “roadshow” occasion, held in Hong Kong in November 2017.
On the occasion John Barksdale signed a $250 million contract for mining tools.
The contract was non-binding and no such buy ever came about.
As is frequent with MLM Ponzi schemes, wash buying and selling was additionally used to drive up ORME’s buying and selling worth.
Previous to the roadshow occasion, John Barksdale bragged to the officers and staff of Ormeus … that he had purchased and bought Ormeus Coin to extend its worth to $1 and would drive its worth increased.
Along with his sister’s help, he made good on that boast.
Within the days surrounding the roadshow in Hong Kong, Defendants and folks they managed at Ormeus International purchased and bought Ormeus Coin straight from and to one another utilizing accounts they managed at Cryptopia to drive up the worth.
The worth of Ormeus Coin peaked at $5.30 on November 19, 2017, the day of the roadshow.
By way of these efforts, along with the false info touted about Ormeus International’s $250 million mining contract, Ormeus International bought $5.7 million price of subscription packages throughout the week of the roadshow – greater than double the gross sales in any prior week.
ORME wash buying and selling was once more deployed in 2018, previous to a number of Ormeus International occasions held throughout Europe.
Time beyond regulation the Ormeus International Ponzi scheme would develop to incorporate Ormeus Money (OMC) and Ormeus Ecosystem (ECO).
BehindMLM lined the introduction of OMC in our 2018 IQ Chain evaluation.
Ormeus Ecosystem was Ormeus International’s final incarnation. It bought a point out in BehindMLM’s current KIWISmart evaluation.
KIWISmart is a clone Ponzi scheme launched by former Ormeus International executives.
As alleged by the SEC, between 2017 and 2021 the Barksdales solicited $124 million from over 20,000 Ormeus International buyers.
Along with what was paid out via the Ponzi scheme;
Defendants have used hundreds of thousands of {dollars} of investor cash for their very own private profit, together with for journey and to buy actual property.
The SEC’s lawsuit options three claims for aid, all violations of the Securities and Alternate Act.
The SEC moreover seeks a everlasting injunction in opposition to the Barksdales, in addition to disgorgement, prejudgment curiosity and a civil penalty.
Keep tuned for updates as we proceed to trace the case.
Replace ninth March 2022 – The SEC’s Ormeus International case is now up on Pacer.
As because the time of this replace there aren’t any substantial entries aside from the preliminary criticism.
