Case 1:22-cv-01933 Document 1 Filed 03/08/22 Page 1 of 25
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`SECURITIES AND EXCHANGE COMMISSION,
`
`Plaintiff,
`
`v.
`
`Case No. 1:22-cv-1933
`
`JOHN BARKSDALE, and JONATINA L.
`BARKSDALE,
`
`JURY TRIAL DEMANDED
`
`Defendants.
`
`COMPLAINT
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`Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
`
`John Barksdale and JonAtina (“Tina”) Barksdale (collectively, “Defendants”), alleges as follows:
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`SUMMARY
`
`1.
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`From at least June 2017 to April 2018, Defendants John and Tina Barksdale
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`fraudulently offered and sold unregistered securities in the form of subscription packages in
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`Ormeus Global, S.A. (“Ormeus Global”), a multi-level marketing business. Also starting in June
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`2017 and continuing through the present, Defendants fraudulently offered and sold unregistered
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`securities in the form of the digital asset Ormeus Coin. Neither the subscription packages nor
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`Ormeus Coin was ever registered with the Commission as a security – although they should have
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`been under the securities laws.
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`2.
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`The Ormeus Global subscription packages that Defendants offered and sold
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`included access to a learning portal about digital assets, funds pooled and invested into a digital
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`asset trading system, and tokens of Ormeus Coin. Through Ormeus Global, Defendants marketed
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`the trading system as a proven program that could give investors passive returns of up to 160% of
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`their initial investment.
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`3.
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`Defendants, through Ormeus Global and Ormeus Coin, represented to investors that
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`Ormeus Coin would support its value by holding other digital assets earned through its digital asset
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`mining operation. They told investors that Ormeus Coin would permanently place 40% of the
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`profits of the digital asset mining business into digital asset wallets known as the “Ormeus Reserve
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`Vault,” or “ORV,” to support the value of Ormeus Coin, which also made the Ormeus Global
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`packages more attractive to investors. They further represented that the ORV would be publicly
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`displayed at orv.ormeuscoin.com.
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`4.
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`Defendants knowingly or recklessly made misrepresentations and engaged in
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`deceptive conduct relating to the duration and size of Ormeus Coin’s digital asset mining
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`operation. Ormeus Coin mined digital assets for less than a year, from February 2018 until January
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`2019. In that time, the entire operation generated less than $3 million in total revenue.
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`Nevertheless, Defendants misrepresented at various times that the operation was generating $5.4
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`million to $8 million in revenue each month. Defendants also misrepresented that Ormeus Coin
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`had $30 million, $35 million, and $250 million worth of digital asset mining equipment at a time
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`when it had less than $1 million of equipment in actual operation. Those misrepresentations
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`continued long after January 2019, when the operation ceased altogether.
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`5.
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`To preserve the fiction that Ormeus Coin was successfully mining digital assets,
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`Defendants arranged for the ORV website to display as its own a digital asset wallet belonging to
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`an unrelated third party, rather than the actual ORV digital asset wallets. That third party’s digital
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`asset wallet first appeared on the ORV website in approximately January 2019 and continued to
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`appear there until December 2021, after Defendants learned that the Commission might file this
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`enforcement action. The digital assets in the displayed wallet (approximately 3081 bitcoin) were
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`worth more than $190 million as of November 2021. By contrast, the assets in the actual ORV
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`digital asset wallets (approximately 7 bitcoin) were worth less than $500,000 as of November
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`2021.
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`6.
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`To this day, a document on the Ormeus Coin website, which Defendants reviewed
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`and approved before it was posted, continues to misrepresent that Ormeus Coin has one of the largest
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`digital asset mining operations in the world and that Ormeus Coin is actively mining digital assets
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`in North America. That document also refers current and prospective investors to the ORV website,
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`which only became inactive in December 2021, to view what purported to be the ORV digital asset
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`wallet but was in fact the digital asset wallet of a third party.
`
`7.
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`Defendants have also launched additional digital assets, Ormeus Cash (OMC) and
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`Ormeus Ecosystem (ECO), which purport to run in connection with Ormeus Coin. A document on
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`the Ormeus Cash website, which Defendants reviewed and approved before it was posted, falsely
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`claims that Ormeus Coin has one of the biggest digital asset mining operations in the world.
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`8.
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`Additionally, Defendants and others working at their direction engaged in
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`manipulative trading of Ormeus Coin in the days surrounding Ormeus Global roadshow events to
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`boost the price of Ormeus Coin, which were included in Ormeus Global subscription packages.
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`Coordinated trading designed to artificially inflate a security’s market price is prohibited by the
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`securities laws. Defendants’ knowing or reckless manipulation of the market deceived investors
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`about the value of Ormeus Coin and therefore the value of Ormeus Global subscription packages.
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`9.
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`Through their fraudulent conduct, Defendants raised at least $124 million from over
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`20,000 investors in the United States and various countries across the globe. Defendants have used
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`millions of dollars of investor money for their own personal benefit including for travel and to
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`purchase real estate.
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`10.
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`By engaging in this conduct, as further described herein, Defendants violated and,
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`unless restrained and enjoined by the Court, may continue to violate Sections 5(a) and (c) and 17(a)
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`of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77e(a), (c), q(a)], and Section 10(b) of
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`the Securities Exchange Action of 1934 (“Exchange Act”) [15 U.S.C. §78j(b)] and Rule 10b-5
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`thereunder [17 C.F.R. §240.10b-5].
`
`VENUE AND JURISDICTION
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`11.
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`This Court has subject matter jurisdiction over this action pursuant to Securities
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`Act Sections 20(b) and 22(a) [15 U.S.C. §§77t(b) and 77v(a)] and Exchange Act Sections 21(d),
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`21(e), and 27 [15 U.S.C. §§§78u(d), 78u(e), and 78aa]. In connection with the conduct alleged in
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`this Complaint, Defendants, directly or indirectly, have made use of the means or instruments of
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`transportation or communication in interstate commerce, or the means or instrumentalities of
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`interstate commerce, or of the mails, or of any facility of any national securities exchange.
`
`12.
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`Venue is proper in this District pursuant to Securities Act Section 22 [15 U.S.C.
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`§77v] and Exchange Act Section 27 [15 U.S.C. §78aa]. Certain of the acts, practices, transactions,
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`and courses of business constituting the violations alleged in this Complaint occurred within this
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`District. Defendants fraudulently offered and sold unregistered securities to investors within this
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`District.
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`DEFENDANTS
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`13.
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`John Barksdale, age 41, is a U.S. citizen who at all relevant times resided on the
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`resort island of Ko Samui in Thailand. He was the founder and primary entrepreneur behind
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`Ormeus Global, S.A. (“Ormeus Global”) and its digital tokens Ormeus Coin (ORME), Ormeus
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`Cash (OMC), and Ormeus Ecosystem (ECO). Mr. Barksdale controlled the operations of Ormeus
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`Global and Ormeus Coin, including its digital asset wallets, and personally solicited investors
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`through webinars and in-person roadshows. In these presentations, Mr. Barksdale routinely made
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`material misrepresentations about Ormeus Coin and its mining operation to induce investments.
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`Mr. Barksdale also instructed Ormeus Global employees and officers to draft marketing materials,
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`including whitepapers and press releases, containing material misrepresentations about Ormeus
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`Coin and its digital asset mining operation, which he approved for publication.
`
`14.
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`JonAtina (“Tina”) L. Barksdale, age 45, is a U.S. citizen who at all relevant times
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`resided in Hong Kong. She is the sister of John Barksdale and with him controlled the operations
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`of Ormeus Global and Ormeus Coin. Tina Barksdale worked in Ormeus’s Hong Kong office, was
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`responsible for coordinating the marketing videos the company used to fashion itself as a
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`legitimate company, and managed bank accounts for the business. Like her brother, she also
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`reviewed and approved marketing materials that contained material misrepresentations about
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`Ormeus Coin and its digital asset mining operation.
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`RELEVANT ENTITIES
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`15. Ormeus Global, S.A. (“Ormeus Global”) was a company organized in Panama
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`on September 4, 2017, with its principal place of business in Hong Kong. All of its corporate
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`officers, however, resided in the United States. Ormeus Global was a multi-level marketing
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`company that offered subscription packages featuring a number of related products, including an
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`algorithm-based trading system that traded digital assets for investors and the digital asset Ormeus
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`Coin. Ormeus Global has not been active since approximately April 2018 and has no assets.
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`16. Ormeus Coin (ORME) is an ethereum-based ERC-20 digital asset that Defendants
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`developed and first listed for trading in June 2017 on a now-defunct digital asset trading platform
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`in Hong Kong that they owned and controlled. In September 2017, Ormeus Coin began trading
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`on additional digital asset platforms including Cryptopia and HitBTC. Since 2018, Defendants
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`have represented to investors that the profits of a digital asset mining operation in North America
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`supported the value of Ormeus Coin.
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`17.
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`Defendants created confusion publicly and among investors about the relationship
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`between Ormeus Global and Ormeus Coin. At times, Ormeus Global was identified as the issuer
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`of Ormeus Coin and the owner of the digital asset mining operation. At most other times, however,
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`including in press releases, website, white papers, and on social media, Ormeus Coin was held out
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`as a separate entity that owned the mining operation, even though it was a digital asset and not a
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`corporate entity.
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`FACTUAL ALLEGATIONS
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`18.
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`Defendants launched Ormeus Global in 2017 by hiring several U.S.-based officers
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`who already worked for Defendants at a different marketing company, instructing the officers to
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`incorporate the company in Panama, and arranging for Ormeus Coin to trade on Crytopia, a New
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`Zealand Exchange. Defendants also designed and produced promotional materials for Ormeus
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`Global subscription packages, which offered access to a learning portal about digital assets, a
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`pooled investment into a digital asset trading system, and tokens of Ormeus Coin.
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`19.
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`Promotional materials for the subscription packages promised investors that the
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`digital asset trading system was a proven program through which investors could earn passive
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`returns of up to 160% of their initial investment. These promotional materials were available on
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`Ormeus Global’s public websites and in a private portal for existing investors to use to recruit new
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`investors. They were also shared with current and prospective investors on webinars and at
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`roadshows conducted by John Barksdale. Contrary to the representations in these materials, the
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`trading system was not a proven system and was still in development for months after Ormeus
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`Global started selling subscription packages.
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`20.
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`A key selling point for both the subscription packages and Ormeus Coin,
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`prominently featured in promotional materials produced by Defendants, was their plan to support
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`the value of Ormeus Coin with other digital assets earned through its digital asset mining operation.
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`Defendants, Ormeus Global, and Ormeus Coin told investors that 40% of the profits of the mining
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`business would be placed into digital wallets known as the “Ormeus Reserve Vault,” or “ORV,”
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`which would permanently hold the digital assets to support the value of Ormeus Coin. They also
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`represented that the ORV would be displayed on a public website so investors could monitor its
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`value. Defendants, Ormeus Global, and Ormeus Coin told investors that most or all of the
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`remaining profits of the mining business would be used to purchase additional digital asset mining
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`equipment and technology to continue to support the value of Ormeus Coin.
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`21.
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`Defendants and Ormeus Global offered and sold the Ormeus Global subscription
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`packages from approximately June 2017 through April 2018 through its unrestricted website that
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`was available to investors worldwide, raising at least $72 million from more than 8,600 investors,
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`including at least 1,000 U.S. residents. This securities offering was not registered with the
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`Commission.
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`22.
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`Defendants have offered and sold the digital asset Ormeus Coin continuously from
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`approximately June 2017 through the present. Ormeus Coin has been available for purchase on
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`digital asset trading platforms, principally Cryptopia, through the Barksdales’ issuance and
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`distribution of approximately 36 million Ormeus Coins directly to more than 12,800 investors,
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`including at least 230 U.S. residents. Ormeus Coin’s highest market capitalization was $52 million
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`on January 15, 2018, based on its value in U.S. dollars at the time. This securities offering was not
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`registered with the Commission.
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`A.
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`23.
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`The November 2017 Roadshow in Hong Kong
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`On or around November 19, 2017, Ormeus Global hosted a roadshow in Hong
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`Kong for current and prospective investors from around the world, including the United States. At
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`the roadshow, the company formally opened its headquarters and marketed its subscription
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`packages.
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`24.
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`Also at the roadshow, John Barksdale, in a highly staged moment in front of a
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`crowd of investors, signed a purported contract for Ormeus Global to purchase $250 million worth
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`of equipment to mine digital assets with an initial deposit of $10 million. John Barksdale intended
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`the pomp and ceremony surrounding the execution of the contract to underscore to investors that
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`Ormeus Global was about to undertake an enormous mining operation of digital assets, the profits
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`of which would support the value of Ormeus Coin and, by extension, make the subscription
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`packages more attractive to investors.
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`25.
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`The document John Barksdale signed at the roadshow was not, in fact, a binding
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`contract. It lacked multiple key terms and called for the parties to execute a more definitive
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`agreement within 30 days. John Barksdale never told investors that this document was not a final
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`contract, nor did he or anyone else ever disclose that the parties never executed a more definitive
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`agreement. Nevertheless, for years afterward, as detailed below, Defendants touted the $250
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`million figure from the document in marketing materials and promoted the purported contract as
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`proof that the company was ramping up a digital asset mining operation on a massive scale.
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`B. Manipulative Trading Around the November 2017 Roadshow in Hong Kong
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`26.
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`Prior to the roadshow event, John Barksdale bragged to the officers and employees
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`of Ormeus, including his sister Tina Barksdale, that he had bought and sold Ormeus Coin to
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`increase its value to $1.00 and would drive its value higher. With his sister’s assistance, he made
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`good on that boast.
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`27.
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`In the days surrounding the roadshow in Hong Kong, Defendants and people they
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`controlled at Ormeus Global bought and sold Ormeus Coin directly from and to each other using
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`accounts they controlled at Cryptopia to drive up the price. In principal part through their
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`manipulative trading, the price of Ormeus Coin peaked at $5.30 on November 19, 2017, the day
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`of the roadshow.
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`28.
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`Defendants manipulated the price of the coin to induce investors to purchase
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`subscription packages at the roadshow in Hong Kong. Because tokens of Ormeus Coin were
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`included in the subscription packages, Defendants knowingly or recklessly misled investors about
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`the value of the packages by artificially driving up the price of the coin.
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`29.
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`Through these efforts, together with the false information touted about Ormeus
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`Global’s $250 million mining contract, Ormeus Global sold $5.7 million worth of subscription
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`packages during the week of the roadshow – more than double the sales in any prior week.
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`C.
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`30.
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`Ormeus Global’s Minimal Mining Activity Through January 2018
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`Digital asset mining is the process of creating new digital assets by solving
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`complex mathematical equations. Digital assets miners or “miners” are devices used to mine
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`digital assets. At the time Defendants began promoting Ormeus Global and Ormeus Coin, only a
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`handful of miners, located in Montana, were dedicated to mining on behalf of Ormeus Coin.
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`31.
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`Between approximately November 28 and December 3, 2017, John Barksdale
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`transferred 845 bitcoins (just under $9 million at the time) to an equipment provider associated
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`with the counterparty named in the purported $250 million contract for the purchase and hosting
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`of mining equipment for Ormeus Global. That deposit was the last payment Defendants, Ormeus
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`Global, or anyone acting on their behalf, would ever make to acquire mining equipment from that
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`company or anyone associated with it, a fact that was never disclosed to investors. As detailed
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`below, Ormeus Global did not receive and begin using this equipment until late February 2018.
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`32.
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`In December 2017, Defendants transferred approximately 150 miners from a
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`different company they controlled to Ormeus Coin and installed it at a warehouse in Massena,
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`New York. Defendants struggled to keep the equipment operational and breaking even.
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`33.
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`Also in January 2018, the miners in Montana that were dedicated to Ormeus Coin’s
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`operations stopped working on behalf of Ormeus Coin and were replaced by miners located in
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`Utah. As of January 2018, therefore, the only digital asset mining equipment dedicated to Ormeus
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`Coin’s mining operation were located in Massena, New York and in Utah. Taken together, this
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`equipment was worth less than $1 million.
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`34.
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`On or around January 16, 2018, Defendants received an email from their equipment
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`operator containing a report of Ormeus Coin’s mining revenue, expenses, and profits. That email
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`showed that in the preceding 30 days, Ormeus Coin had revenue of less than $200,000 from mining
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`digital assets.
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`D.
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`35.
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`The January 2018 Webinar
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`On or around January 8, 2018, John Barksdale held a live, publicly available
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`webinar for current and prospective investors of Ormeus Global showing his PowerPoint
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`presentation, “Ormeus Coin: Money Making Machine.” Investors in the United States and around
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`the world viewed this webinar.
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`36.
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`During the presentation, John Barksdale made multiple material misrepresentations
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`about Ormeus Coin’s current and projected assets and revenues. Specifically, he claimed that
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`Ormeus Coin had made an initial deposit of $35 million to purchase mining equipment, when in
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`fact he knew or was reckless in not knowing that he and Ormeus Global had paid less than $9
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`million at that time. He also claimed that Ormeus Coin had a $250 million contract to purchase
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`mining equipment, though he knew or was reckless in not knowing that no such enforceable
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`agreement existed.
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`37.
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`These misrepresentations about Ormeus Coin’s mining operations were material to
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`potential investors because 40% of the profits of the mining operation were supposed to be used
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`to support the value of Ormeus Coin, and most or all of the remaining profits were to be reinvested
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`into purchasing additional digital asset mining equipment and technology to further support this
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`value.
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`38.
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`John Barksdale also made baseless representations in his webinar about Ormeus
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`Coin’s projected revenues from its mining operations. He claimed that within the next four
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`months, Ormeus Coin would earn $5 million per month and that it would eventually earn $36
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`million per month as it purchased more mining equipment. These projections lacked any factual
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`basis, yet John Barksdale presented them as a guarantee, using phrases like, “Mark my words.”
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`John Barksdale did not disclose any risks that threatened Ormeus Coin’s ability to meet these
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`projections, including: the difficulty of procuring mining equipment; the fact that mining
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`equipment quickly becomes obsolete; and that Ormeus Coin had not secured a location to host and
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`power all of the mining equipment it would need to meet these projections, if it ever managed to
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`procure it. John Barksdale knew or was reckless in not knowing that these undisclosed risks
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`existed. These misrepresentations were material to potential investors because they created a false
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`sense of certainty that Ormeus Coin would be valuable in the future, which affected the perceived
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`value of both Ormeus Coin and Ormeus Global subscription packages.
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`E. Manipulative Trading Around The January 2018 European Roadshows
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`39.
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`In the second half of January 2018, Ormeus Global hosted roadshows throughout
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`Europe in cities including Oslo, Stockholm, Berlin, Krakau, and Vienna to sell subscription
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`packages to investors.
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`40.
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`In the days surrounding the roadshows in Europe, Defendants and people they
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`controlled at Ormeus Global drove up the value of Ormeus Coin, from a low of $1.85 on
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`January 12, 2018 to a high of $2.98 on January 21, 2018, by trading directly with each other at
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`Cryptopia.
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`41.
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`Defendants knowingly or recklessly manipulated the value of the coin to induce
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`investors at the roadshows in Europe into purchasing subscription packages by making it appear
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`that there was an active market for Ormeus Coin that was increasing in value. In principal part
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`through these efforts, Ormeus Global sold approximately $3 million worth of subscription
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`packages during the last three weeks of January 2018.
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`F.
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`42.
`
`The Misleading “Ormeus Coin – Mining Facility” Video
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`On or around February 5, 2018, a video was published on Ormeus Coin’s YouTube
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`page entitled “Ormeus Coin – Mining Facility” that purported to feature an Ormeus Coin facility
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`located in Montana housing approximately $25 million of mining equipment. John Barksdale gave
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`instructions to the speaker in the video regarding what to say, and Tina Barksdale was responsible
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`for coordinating with the videographer and photographer to shoot and edit the video. The video
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`was subsequently published on the public landing page of Ormeus Coin’s website.
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`43.
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`By the time the video was published, no equipment at this facility was part of
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`Ormeus Coin’s mining operation. Moreover, only a small number of the miners in the facility had
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`ever mined on behalf of Ormeus Coin, whereas the video gives the impression that the entire
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`facility was part of Ormeus Coin’s operation. The video features approximately $25 million of
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`operational equipment, whereas as of February 5, 2018, Defendants, Ormeus Global and/or
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`Ormeus Coin had only about $1 million in operational equipment and had paid less than $9 million
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`to purchase additional equipment. The video is therefore highly misleading regarding the size of
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`Ormeus Coin’s mining operation as of February 2018.
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`44.
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`Defendants knowingly or recklessly created and published the video to mislead
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`investors into believing that Ormeus Coin had tens of millions of dollars of equipment actively
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`mining digital assets to prop up the value or Ormeus Coin. The video was publicly available on
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`the Ormeus Coin website, is still available on the Ormeus Coin YouTube page, and was distributed
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`to Ormeus Global investors through email at the Defendants’ direction and approval.
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`G.
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`45.
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`The February 2018 Whitepaper and Related Promotional Materials
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`On or around February 8, 2018, a whitepaper titled, “The Tokenization of Industrial
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`Cryptocurrency Mining,” was published on Ormeus Coin’s public website. Prior to publication,
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`Defendants hired the author, reviewed the whitepaper several times, and approved the final draft
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`for publication to the website.
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`46.
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`The whitepaper misrepresented that Ormeus Coin had $30 million worth of mining
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`equipment, that it generated $5.4 million in revenue per month from its mining operation, that
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`those asset and revenue figures had been audited, and that Ormeus Coin had an agreement with a
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`hydrodam in New York to obtain inexpensive and clean electricity.
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`47.
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`None of those claims was true, which Defendants knew or were reckless in not
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`knowing at the time they approved them for publication. At the time of publication, Ormeus Coin
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`had purchased less than $10 million of digital asset mining equipment, had only about $1 million
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`of such equipment in actual operation, was producing less than $200,000 of mining revenue per
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`month, had never had its financial statements or mining assets audited, and did not have an
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`agreement with a hydrodam in New York.
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`48.
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`On February 9, 2018, Defendants issued a press release under the name of Ormeus
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`Coin entitled “$250 Million Cryptocurrency Mining Farm Revealed in Legal Audit by Ormeus
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`Coin” using a news wire service called PR Newswire. A link to this press release also appeared
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`on the Ormeus Coin Twitter and Facebook social media accounts.
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`49.
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`Defendants hired the author of the whitepaper to draft the press release and
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`approved its publication. The press release misrepresented that Ormeus Coin had a $250 million
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`mining operation and was producing $6.7 million in revenue per month. The press release also
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`embedded the video from February 5, 2018 entitled, “Ormeus Coin – Mining Facility.” Again, at
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`this time, Ormeus Coin had purchased less than $10 million of digital asset mining equipment, had
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`only about $1 million of such equipment in actual operation, was producing less than $200,000 of
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`mining revenue per month, and did not own the facility or any of the equipment shown in the
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`video. Defendants knew or were reckless in not knowing that the press release and video were
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`false and misleading when they approved them for publication.
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`50.
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`On February 9, 2018, Ormeus Global, at the direction of John Barksdale, emailed
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`the February 9, 2018 press release, including the misrepresentations concerning Ormeus Coin’s
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`Case 1:22-cv-01933 Document 1 Filed 03/08/22 Page 15 of 25
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`assets and mining revenue, to all Ormeus Global investors who had purchased subscription
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`packages. Existing investors thereafter purchased additional Ormeus Coins and/or recruited
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`additional investors consistent with Ormeus Global’s multilevel marketing model.
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`51.
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`On February 12, 2018, Ormeus Global and Ormeus Coin published ads on their
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`Twitter and Facebook accounts and a video on YouTube appearing to show Ormeus Coin
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`advertising in Times Square in New York City. The social media ad on Twitter stated, “Live from
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`New York City, Ormeus Coin advertising its $250 million Cryptocurrency Mining Farm in Times
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`Square, Manhattan!” This advertisement was false: Ormeus Coin had purchased less than $10
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`million of digital asset mining equipment and had only about $1 million of such equipment in
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`actual operation. Defendants acted knowingly or recklessly in reviewing and approving this
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`advertisement before Ormeus Global and Ormeus Coin published it.
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`
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`52.
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`On February 16, 2018, Defendants, under the name of Ormeus Coin, issued a press
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`release through PR Newswire entitled “Ormeus Coin Mining Profits Reach $5.4 Million per
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`Month.” A link to this press release also appeared on Ormeus Coin’s Twitter and Facebook social
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`media accounts.
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`53.
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`Defendants hired the author of the whitepaper to draft the press release and
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`approved its publication. The press release misrepresented that Ormeus Coin had a $250 million
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`mining operation and was producing $5.4 million in revenue per month. The press release also
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`included an image from the facility depicted in the February 5, 2018 YouTube video and falsely
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`called it “the Ormeus Coin industrial cryptocurrenty mining operations in North America.” As
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`explained above, Defendants, Ormeus Global and/r Ormeus Coin had purchased less than $10
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`million of digital asset mining equipment, had only about $1 million of such equipment in actual
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`operation, were producing less than $200,000 of mining revenue per month. Additionally, neither
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`Case 1:22-cv-01933 Document 1 Filed 03/08/22 Page 16 of 25
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`the facility nor the equipment depicted in the video belonged to Ormeus Coin or any related person
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`or entity. These misrepresentations were material because the size of the mining operation affected
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`potential investors’ impression of the value of Ormeus Coin and the Ormeus Global subscription
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`packages. Defendants acted knowingly or recklessly in approving this press release for
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`publication.
`
`H.
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`The March 2018 Mining Tour and Defendants’ Further Manipulative
`Trading of Ormeus Coin
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`54.
`
`On or around March 17 through March 19, 2018, Ormeus Global and Ormeus Coin
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`hosted a mining tour in Utah to show several hundred foreign and U.S. investors three shipping
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`containers that were being built to host Ormeus Coin’s digital asset mining equipment. Investors
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`also visited a fixed data center containing additional equipment. While the equipment in the
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`shipping containers did belong to Ormeus Global or Ormeus Coin, it was not yet operational. Only
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`some of the equipment at the fixed data center belonged to either Ormeus Global or Ormeus Coin.
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`John Barksdale instructed Ormeus Global employees to create the tour to promote the business.
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`55.
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`Defendants also arranged to have the tour filmed for release to the broader public.
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`Tina Barksdale was responsible for coordinating with the videographer and photographer to shoot
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`and edit video of the event, and John Barksdale instructed the individual appearing in the video
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`regarding what to say.
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`56.
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`On or around March 26, 2018, Defendants and Ormeus Coin published a video
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`titled “Ormeus Coin Mining Tour” on YouTube showing footage from the mining tour. The video
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`is misleading in that it gives the false impression that all of the equipment featured belonged to
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`Ormeus Coin, when in fact Ormeus Global or Ormeus Coin only owned a portion of the equipment
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`at the fixed data center.
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`57.
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`Defendants acted knowingly or recklessly in shaping and approving the content of
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`the video before it was released to the public. They knew or was reckless in not knowing that the
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`equipment featured at the fixed data center did not all belong to Ormeus Coin. They also knew or
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`was reckless that the video as a whole misrepresented the size of Ormeus Coin’s mining operation,
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`especially when considered in the context of the prior video, entitled “Ormeus Coin – Mining
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`Facility,” which showed tens of millions of dollars of different equipment that also did not belong
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`to Ormeus Coin. These videos together misrepresented to investors that Ormeus Coin was mining
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`digital assets on a massive scale.
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`58.
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`In the days surrounding the mining tour and the subsequent publication of the
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`mining tour video on YouTube, Defendants and Ormeus Global employees working at their
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`direction manipulated the value of Ormeus Coin, from a low of $1.05 on March 18, 2018 to a high
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`of $3.24 on March 27, 2018, by trading directly with each other through accounts they held at
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`Cryptopia. During the period of March 17 through March 30, 2018, Defen