The Securities and Exchange Commission (SEC) has filed a lawsuit against Donald G. Basile, the founder of Monsoon Blockchain Corporation, alleging that he defrauded investors by claiming his cryptocurrency token, Bitcoin Latium, was insured and asset-backed when in fact it was not.
According to the SEC's complaint, Basile raised $16 million from hundreds of investors worldwide between March and December 2021, using false marketing materials and promises to support the token's value. The marketing materials claimed that the token had 'up to $1 billion coverage' from a leading specialty insurance broker, but no policy was ever issued.
The SEC also claims that Basile promised investors that 80% or more of the offering proceeds would go into a fund supporting LTNM's value, but instead spent the money on himself, including purchasing a Miami condo and a horse for his daughter. The token is now worthless, and many investors have lost everything they put in.
The SEC is seeking permanent injunctions, disgorgement with interest, civil penalties, and a bar keeping Basile out of public-company boardrooms and C-suites. This lawsuit highlights the importance of thorough due diligence when investing in cryptocurrencies, particularly those that claim to be insured or asset-backed.