Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 1 of 20
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
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`SEATTLE DIVISION
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`SECURITIES AND EXCHANGE COMMISSION,
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`Plaintiff,
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`v.
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`DOUVER TORRES BRAGA,
`JOFF PARADISE, and
`KELEIONALANI TAYLOR,
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`Defendants.
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`No. 2:22-cv-01563
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`COMPLAINT
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`Plaintiff Securities and Exchange Commission (the “SEC”) alleges:
`SUMMARY OF THE ACTION
`Douver Torres Braga (“Braga”), Joff Paradise (“Paradise”), and Keleionalani
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`Taylor (“Taylor,” collectively “Defendants”), ran or promoted a Ponzi scheme called “Trade
`Coin Club” that raised at least $295 million from more than 100,000 investors between
`December 2016 and May 2018.
`Trade Coin Club was a fraudulent international offering scheme that collected
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`more than 82,000 bitcoin, worth approximately $295 million at the time, from more than
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 2 of 20
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`100,000 worldwide investors, and was marketed as an opportunity to profit from the supposed
`crypto asset trading activities of Trade Coin Club’s alleged crypto asset trading bot.
`Defendant Braga was the creator and primary beneficiary of the Trade Coin Club
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`fraud, receiving at least 8,396 bitcoin, worth approximately $55 million at the time, from Trade
`Coin Club’s investors.
`Braga orchestrated the fraud through his control and operation (through
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`programmers he hired) of the Trade Coin Club website, through which investors deposited their
`bitcoin, and through his distribution and presentation of online marketing materials that made
`numerous materially false and misleading statements to lure investors to send their bitcoin to
`Trade Coin Club. These materials and recorded video presentations by Braga falsely claimed
`that Trade Coin Club had successfully developed and was earning profits from an automated
`crypto asset trading program or “bot.” Braga also falsely stated that the trading bot made
`“millions of microtransactions” every second and had a “stop loss” feature that would assure
`minimum daily trading profits for investors.
`Among other evidence, blockchain analysis reveals that, in reality, Trade Coin
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`Club operated in a manner consistent with a Ponzi scheme. Specifically, Trade Coin Club had
`no external source of funding for investor withdrawals or redemptions, such as profits from
`trading. Instead, investor withdrawals were paid solely with investor deposits. Blockchain
`analysis also confirms that at least 8,396 bitcoin, worth $55 million at the time, was transferred
`from Trade Coin Club investor deposits to addresses controlled by Braga at certain crypto asset
`platforms.
`To recruit new investors to join Trade Coin Club, Braga implemented a pyramid
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`scheme-like referral system to reward existing members for recruiting new investors. The Trade
`Coin Club “membership packages” were offered and sold by Defendants as investment
`contracts, and therefore securities, under the federal securities laws. Defendants offered and sold
`these securities without registration, and without qualifying for any exemption from registration.
`Braga recruited and trained others, including “master distributors,” to present the
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`marketing materials and repeat the false and misleading statements about the purported trading
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 3 of 20
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`bot and guaranteed daily trading profits, including Defendant Joff Paradise. Paradise, who used
`the title “Director of the United States” for Trade Coin Club, touted Trade Coin Club
`extensively, including at events worldwide and in numerous videos posted online that presented
`the Trade Coin Club marketing materials and repeated the materially false and misleading
`statements about the purported trading bot and guaranteed daily trading profits. Paradise
`received at least 238.97 bitcoin as compensation for promoting Trade Coin Club and soliciting
`investors, worth approximately $1,410,164 at the time.
`Paradise, in turn, recruited numerous individuals to invest in and solicit others to
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`invest in Trade Coin Club. The network Paradise recruited included Defendant Taylor, the
`largest U.S. promoter of Trade Coin Club who, in turn, solicited a network with thousands of
`downstream recruits and received approximately 735.54 bitcoin from Trade Coin Club, worth
`approximately $2,647,413 at the time. She recorded and posted online videos promoting Trade
`Coin Club and instructed new investors how to contribute their bitcoin and navigate the online
`user platform.
`In early 2018, Trade Coin Club announced that it would discontinue services to
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`U.S. residents. Shortly thereafter, it ceased providing redemptions to any investors in bitcoin
`and instead required investors to withdraw assets in “TCoin,” a new crypto asset issued by Trade
`Coin Club, which ultimately became worthless.
`By summer of 2018, Braga and Paradise ceased promoting Trade Coin Club, and
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`many investors could no longer access any assets in their Trade Coin Club accounts.
`JURISDICTION AND VENUE
`The SEC brings this action pursuant to Sections 20(b), 20(d), and 22(a) of the
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`Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections
`21(d), 21(e), and 27 of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§
`78u(d), 78u(e), and 78aa].
`This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1),
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`and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)] and Sections 21(d),
`21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 4 of 20
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`Defendants, directly or indirectly, made use of the means or instruments or
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`instrumentalities of transportation or communication in interstate commerce, or of the mails, or
`the facilities of a national securities exchange, in connection with the transactions, acts,
`practices, and courses of business alleged in this complaint.
`Venue is proper in this District pursuant to Section 22(a) of the Securities Act
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`[15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. Acts,
`practices, transactions, and courses of business that form the basis for the violations alleged in
`this complaint occurred within this District. Defendants Braga, Paradise, and Taylor solicited
`investors in this District. During the relevant time period, Taylor also resided in this District.
`Pursuant to LCR 3(e)(1), assignment to the Seattle Division is appropriate because a substantial
`part of the relevant conduct occurred in King County.
`DEFENDANTS
`Douver Torres Braga (“Braga”) is 45 years old and resided in Florida during the
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`period of Trade Coin Club’s operations but currently resides in Brazil. Braga created and
`controlled Trade Coin Club.
`Joff Paradise (“Paradise”) is 60 years old and resided in Nevada during most of
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`the period of Trade Coin Club’s operations but currently resides in Panama. Paradise described
`himself as the Director of the United States for Trade Coin Club.
`17. Keleionalani Taylor (“Taylor”) is 42 years old and resides in Mililani, Hawaii.
`Taylor was the highest compensated U.S.-based promoter of Trade Coin Club and resided in
`Sammamish, Washington, during most of the period of Trade Coin Club’s operations.
`FACTUAL ALLEGATIONS
`Braga Established Trade Coin Club and Recruited Paradise as the Lead Promoter in
`the United States.
`Braga and Paradise met in or around 2015 through their work promoting a multi-
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`level marketing company that sold skincare and wellness products, which also paid commissions
`for recruiting new participants.
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`In 2016, Braga established Trade Coin Club, a multi-level marketing program that
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`promised profits purportedly made from a proprietary crypto asset trading software or “bot,” as
`well as commissions for recruiting new investors. Braga hired a software development company
`in Brazil to build the record system that supported Trade Coin Club. The programmers hired by
`Braga registered and paid for the dedicated, cloud-based server that hosted the Trade Coin Club
`website, www.tradecoinclub.com.
`Investors participated in Trade Coin Club by creating a user account on the
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`website, identifying their sponsor (the person credited with soliciting their investment), and
`sending bitcoin to a unique public address1 provided to the user through the website. Investors
`who created a user account on the Trade Coin Club website could then log in to an area of the
`website called the “Back Office,” where they could view and access details of their account. In
`the Back Office, Trade Coin Club’s promoters (also known as “affiliates” or “distributors”)
`could view the accounts of members they had recruited (which is known as their “downline” or
`“network”), commissions, and other relevant information.
`The Trade Coin Club Back Office displayed what appeared to be up-to-date
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`account information, including purported trading profits. Through the Trade Coin Club Back
`Office, investors could also request redemptions and specify a public address at which they
`could receive bitcoin from Trade Coin Club.
`Braga made arrangements for an office space and a small staff in Belize, which he
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`identified as Trade Coin Club’s headquarters.
`Braga shared the office and staff with a company called “Trade by Trade,” a
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`newly formed crypto asset trading platform. Braga depicted the two organizations as one
`combined business and created the false impression that Trade by Trade conducted crypto asset
`trading activities for Trade Coin Club. Braga also falsely represented to Trade Coin Club
`investors that Trade by Trade’s owner was also Trade Coin Club’s owner and president.
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`1 A public address on the Bitcoin blockchain is a unique identifier that is associated with the amount of bitcoin
`recorded as having been sent to or received by that address. It is the “public key” half of a pair of keys generated by
`a cryptographic process and is generally between 24 and 34 alphanumeric characters in length when compressed.
`The other half of the pair is a “private key” that is then used to “sign” or authorize a transfer of funds from the
`associated public address to another public address on the Bitcoin blockchain.
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`COMPLAINT
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`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 6 of 20
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`In late 2016, Braga recruited Paradise to be a founding member of Trade Coin
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`Club and the Director of Trade Coin Club’s U.S. operations. Braga also presented marketing
`materials, including a Trade Coin Club slide deck that contained numerous materially false and
`misleading statements about Trade Coin Club’s purported crypto asset trading operations. Braga
`trained Paradise and other founding members with territories outside the U.S. on how to present
`the slide deck and other marketing materials to potential Trade Coin Club investors.
`Braga and Paradise Widely Marketed Trade Coin Club’s Purported Crypto Asset
`Trading Bot and Developed a Large Network to Recruit New Investors
`Beginning in December 2016, Braga pitched Trade Coin Club to contacts in the
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`multi-level marketing industry through online video conferences. On December 16, 2016, a
`recorded presentation of Braga announcing the first day of Trade Coin Club’s operations was
`posted to YouTube (the “Kickoff Video”). In the video, Braga explained the Trade Coin Club
`program for almost an hour while covering the Trade Coin Club slide deck detailing relevant
`features of the program.
`In the December 16, 2016 Kickoff Video, Braga highlighted, among other things,
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`three primary claims that mirrored statements in the Trade Coin Club slide deck and which were
`important to investors who decided to invest in Trade Coin Club. Braga stated: (1) that Trade
`Coin Club operated the first “cryptocurrency” trading “robot” in the world; (2) that the Trade
`Coin Club bot made “millions of microtransactions” every second; and (3) that the trading
`software had a “stop loss” feature that guaranteed minimum daily profits from trading.
`Speaking in his native language of Portuguese, Braga made the following
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`statements in the Kickoff Video (the English translation is as follows):
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`Our system only trades in digital currencies. Ok? So it is very clear
`here, guys. This is a competitive billion-dollar market, and few
`people have access to it. Unfortunately today, few people have
`access to it. But through TCC, a software developed by a team
`specialized in trading, [sic] will provide the opportunity for anyone
`anywhere in the world to be part of this market and obtain earnings
`at three different levels of trading. Guys, three levels of trading.
`With skill, little skill, or no skill whatsoever. Sometimes people
`won’t even know what trade is [sic], and they will be able to earn
`here inside our system.
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 7 of 20
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`When we say robots, this is a system, a software, ok? Doing
`everything under the system’s control. … We have a system that
`is the first system in the world, the first robot in the world, to operate
`in cryptocurrency trade ... we are the only robot legitimately trading
`cryptocurrencies.
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`Our system makes millions of transactions, microtransactions, every
`second ... . That the club has gains every second, every minute,
`every hour. It can then have a guarantee that the members will not
`put at risk all the coins invested.
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`Do you see something called stop loss down there? This is not lost,
`it is stop loss. Let’s correct that. This stop loss is .35% on the daily
`trades it guarantees for you. ... If you are already a Trader it has a
`stop loss guarantee of 0.40. And if you are a “Senior Trader”, 0.45
`of profit on each trade made daily. Oh, sorry, not each trade. At the
`closing of the trades. Guys, there are millions of trades. That
`compounds. This compounding, the minimum it will be able to pay
`you is 0.45.
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`The Trade Coin Club Back Office contained marketing materials for the program,
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`which included the Trade Coin Club slide deck that Braga presented, translated into twenty
`languages. The English version of the slide deck featured the following slide titled, “What Do
`We Do?”, which included false statements about the purported bot:
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`The Trade Coin Club Back Office also embedded three promotional videos in
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`various languages that had been uploaded to YouTube between December 15, 2016 and June 20,
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 8 of 20
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`2017. Braga hired a vendor to create these videos, which featured professional graphics and an
`unidentified speaker making representations similar to those from the slide deck.
`Paradise enrolled in Trade Coin Club on December 16, 2016, the day Braga’s
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`Kickoff Video was posted online. In the weeks following the Kickoff Video, Braga trained
`Paradise and other founding members on how to present the Trade Coin Club slide deck and
`most effectively describe Trade Coin Club to solicit new investors.
`Braga and Paradise promoted Trade Coin Club widely, and a number of their
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`speeches and presentations were recorded and posted online. Their speeches and presentations
`highlighted many of the same features of the purported crypto asset trading software that Braga
`described in his Kickoff Video and in the Trade Coin Club slide deck, including that Trade Coin
`Club had developed crypto asset trading software that made millions of microtransactions every
`second and had a stop loss feature that assured minimum daily profits.
`Numerous recordings feature Paradise explaining Trade Coin Club in depth from
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`the earliest weeks of its existence. In promoting Trade Coin Club, Paradise identified himself as
`the “Director of the United States” or “head of the United States” for Trade Coin Club. For
`example, Paradise made these representations in a recording on January 2, 2017, and in a video
`posted to YouTube on January 21, 2017.
`In its earliest weeks, Paradise identified Braga as the head of Trade Coin Club.
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`For example, in a recording from December 24, 2016, Paradise stated that there was no one
`“above” Braga in Trade Coin Club.
`In marketing Trade Coin Club, Paradise touted the advantages of Trade Coin
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`Club’s purported trading software. For example:
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`In a video posted on January 21, 2017, Paradise stated “[B]y using
`our sophisticated technology and the tools that we’ve designed
`through the strategies that we’ve found, and basically we’ve taken
`about six years of data and we have used that to study, and our
`system, and our computers have analyzed and analyzed the data and
`to see where the algorithms are and to see -- and it really breaks
`down to being very simple, you buy low and you sell high, and it’s
`that simple. You buy the -- you buy an investment low and then you
`turn around and sell it high.”
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`In a recording from December 22, 2016, Paradise stated “Okay. So,
`you have to understand that this software took a lot of time, a lot of
`money, a lot of effort on riding [sic] for it to work, and some of you
`might ask, well, what’s the track record. Well, we’ve been on for
`the last -- since the fifteenth, and we’ve made money every day.
`How much money? Sometimes it’s $6, $8, $10, you know, it varies
`depending on the amount of bitcoin you have in of course and what
`your return is on that. So, for me to put out numbers would be
`wrong, but for me to tell you that we have actually done (inaudible.)
`You bet we’ve made money every day.”
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`In a video posted on February 27, 2017, Paradise stated “Our trading
`software -- and this is something that I love, because it’s very
`unique. It is -- it is one of a kind. We spent years of developing this
`software. There’s actually only 10 people in the entire United States
`that know how to program this type of software. It is very unique
`and encrypted.”
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`Paradise frequently stated in promotional presentations that Trade Coin Club
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`guaranteed minimum daily returns. In early conference call recordings that were posted online,
`Paradise stated that the minimum returns started at .035 or .0035 percent, but in later videos
`when he presented the Trade Coin Club slide deck, he used the numbers reflected there,
`beginning at 0.35%. Specifically:
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`In a recording from December 20, 2016, Paradise stated: “The worst
`that can happen is that you can make money at .035 percent.”
`In a recording from December 22, 2016, Paradise stated: “the worst
`you can do at the low-risk trading level is 0.035 -- 0.0035 percent.
`That’s the worst you’ll do, so that’s not a negative; that’s a positive.
`So in other words, you’re going to make – or you’re going to get
`0.0035 percent if we have a horrible day, and we can do that because
`we take 45 percent of our money that’s coming into the company,
`the money that’s made and we back those trades.”
`In a recording from December 24, 2016, Paradise stated: “So, the
`worst you can do if you have 1 coin in, the worst you’re going to do
`in a day is 0.0035 as a low risk one coin.”
`In a recording from January 2, 2017, Paradise stated: “If you come
`in at low the worst you’ll do – now catch this very closely, the worst
`that you will do is 0.0034 percent. If you come in at medium risk,
`the worst you’ll do is 0.004 percent. And if you come in at high risk,
`the worst you’ll do is 0.0045 percent.”
`In a video posted on January 21, 2017, Paradise stated: “So, guys, it
`means that risk level at a low level, and that means that the least that
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`Securities and Exchange Commission
`
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 10 of 20
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`you’re going to do at low risk is 0.35 percent. Now keep in mind
`that’s not brackets. That’s means that we’re going to pay you or
`you’re going to make off of your Bitcoin at least 0.35 percent at low
`risk. At medium risk it’s .40 percent, and at high risk it’s .45
`percent. So every day -- if we had a bad day in the trading, you
`wouldn’t have a bad day, you would only make .45 percent, … . It’s
`not a lot, but it sure beats a negative or you actually losing money.”
`In a video posted on February 27, 2017, Paradise stated: “So, then
`does that mean the worst I’ll do on that day if I’m at a low risk is
`0.35 percent? Exactly. That’s exactly what it means. If you’re at a
`medium risk, the worst you’ll do is 0.40 percent, and if you’re at a
`high risk, the worst you’ll have in trading day -- if we have a really
`bad trading day, which we haven’t so far, but if we do, the worst
`you’re going to do is 0.45 percent.”
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`Paradise marketed Trade Coin Club as a passive investment that was well suited
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`for individuals with limited funds and without any experience in trading. In a recording from
`December 20, 2016, Paradise stated “[s]o what we’ve done is taken a guy that doesn’t know
`anything about trading, the mom that has three kids that’s on social security or on welfare and
`she has a little bit of – she has some bitcoin and maybe somebody gave her ... we’ve figured out
`how to let her do that and be able to make money every day and not lose a dime.”
`In several recordings, Paradise falsely stated that Trade Coin Club was “licensed”
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`and “insured.”
`Braga organized an event for Trade Coin Club promoters from around the world
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`to visit Belize, from January 26-30, 2017. In the months that followed, numerous events
`promoting Trade Coin Club were held worldwide. Braga and Paradise presented at most of these
`events and were featured on the promotional announcements. Braga approved and paid for
`expenses associated with many Trade Coin Club events.
`Trade Coin Club Used a Multi-Level Marketing Structure to Recruit New Investors
`In their speeches and presentations, Braga and Paradise also touted the
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`opportunity to earn lucrative commissions for recruiting new investors. They held numerous
`videoconferences and webinars, including the videos and recordings identified above, in which
`they trained individuals with experience promoting multi-level marketing operations on how to
`recruit investors to Trade Coin Club. For example, in the Kickoff Video, Braga stated, “When
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`10
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 11 of 20
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`you talk to someone who is an investor who does not have the gift of recruiting people … , you
`do not talk about the other four bonuses. You only talk about the first one. Only the direct
`referral.” In a video posted to YouTube on January 21, 2017, Paradise stated that even though
`some people may initially “get in this as a passive investor” and not plan to make referrals, when
`they “see it make them that money back right, quick and then they see this compensation plan
`and they’re like, uhm, you know what, I think I do have somebody that I’d like to get into this.”
`Trade Coin Club offered three levels of membership titled “Apprentice,”
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`“Trader,” and “Senior Trader,” which provided progressively higher compensation and benefits
`depending on the amount of initial investment. The benefits included, among other things,
`varying levels of commissions for recruiting new members and varying levels of purported
`minimum investment returns, which were marketed under the guise of the “stop loss” feature.
`Trade Coin Club provided five categories of commissions for members who
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`brought in new investments, which was referred to as the “compensation plan.” Trade Coin
`Club offered 10% commissions for direct recruits, additional commissions of 3% to 1% for
`indirect (or “downstream”) recruits up to eight levels, and two different types of periodic
`bonuses based on the size of the member’s whole network. The fifth level of the compensation
`plan was called the “Renewal Team Bonus.”
`In addition to the compensation plan, Braga announced a promotion for the first
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`500 people to invest at least 5 bitcoin, which was the minimum to qualify for the Senior Trader
`level. Braga stated that this group of 500 people would be considered “founders” and would
`share 2% of Trade Coin Club’s revenues every three months for 10 years.
`Trade Coin Club Grew Rapidly and Then Collapsed
`From December 2016 to May 2018, Trade Coin Club collected a total of 82,648
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`bitcoin worth approximately $295 million at the time the bitcoin was received. Trade Coin Club
`had over 100,000 investors worldwide, including at least 2,500 investors in the United States.
`Trade Coin Club investor deposits peaked in June 2017, and investor withdrawals
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`started to exceed deposits by September 2017. On a monthly basis, the total deposits into Trade
`Coin Club less withdrawals exceeded 3,000 bitcoin from January through June 2017, and
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`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 12 of 20
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`reached a high in June 2017 of 7,524 bitcoin, worth $19,367,099 at the time. However, in July
`2017, net deposits dropped below 2,000 bitcoin and by September 2017, Trade Coin Club was
`paying out more in withdrawals than it was bringing in from investors.
`In November 2017, Trade Coin Club introduced its own crypto asset named
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`TCoin.
`In or around January 2018, Trade Coin Club announced that it was withdrawing
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`from the United States and closing U.S. residents’ accounts. Investors received a notice in the
`Back Office titled “WE HAVE THE REGRET TO ANNOUNCE THAT WE WILL NO
`LONGER BE ACCEPTING U.S. INDIVIDUALS.” The notice explained that Trade Coin Club
`“will be discontinuing services to our existing U.S. individual members and block access to [the]
`members located in the U.S.” The notice specified that “[c]ustomers who have already
`recovered their investment or who are winning will have their accounts closed with immediate
`effect,” while anyone “[w]ho has not recovered his investment from now on will have his
`account partially operative, but he may have activity until he recovers his initial investment and
`then proceed to withdraw it.”
`In February 2018, Trade Coin Club announced that it would no longer pay
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`withdrawals in bitcoin but would require investors to withdraw funds in TCoin instead.
`Investors received another notice in the Back Office that explained “the club decided to
`exclusively use TCoin TCN as form of payment in order to have faster response to its members,
`taking into account Blockchain delays.”
`Braga and Paradise continued promoting Trade Coin Club and the conversion of
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`investors’ bitcoin to TCoin into the spring of 2018. They appeared in a video together that was
`posted to YouTube on March 27, 2018, in which Paradise stated “keep in mind that TCoin is
`going to continue to go up, we believe” to which Braga responded “Yeah.” Paradise also
`appeared in a video with another U.S. promoter that was posted to YouTube on March 5, 2018,
`in which Paradise encouraged investors to hold on to their TCoin to increase its value.
`At an event in Dubai, on May 25-26, 2018, Braga announced that he would be
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`stepping down from Trade Coin Club. Subsequently, many investors could no longer access
`
`COMPLAINT
`SEC V. BRAGA ET AL. (NO. 2:22-CV-01563)
`
`12
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`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
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`Case 2:22-cv-01563 Document 1 Filed 11/03/22 Page 13 of 20
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`their Trade Coin Club Back Office accounts or withdraw any bitcoin or TCoin. On July 11,
`2018, Paradise announced his resignation from Trade Coin Club.
`50. Many Trade Coin Club investors were unable to withdraw their crypto assets
`before Trade Coin Club collapsed and lost most or all of the principal they invested.
`Blockchain Analysis Confirms That Trade Coin Club Operated as a Ponzi Scheme
`Blockchain analysis confirms that Trade Coin Club operated consistent with a
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`Ponzi scheme. Specifically, 99.96% of investors’ bitcoin withdrawals were funded by other
`investor deposits. This evidence confirms that Trade Coin Club did not earn returns from any
`crypto asset trading, let alone a trading “bot” that could guarantee daily trading profits.
`Trade Coin Club maintained custody of the bitcoin directly and processed
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`transactions directly on the Bitcoin blockchain. At least 8,437 bitcoin of Trade Coin Club’s
`investor deposits were ultimately sent to crypto asset platform accounts in Braga’s name. The
`Trade Coin Club investments that Braga personally received were worth over $55 million at the
`time of transfer, which continued even after Trade Coin Club stopped allowing investors to
`withdraw assets in bitcoin.
`Throughout Trade Coin Club’s period of operations, potential investors raised
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`concerns that it may be a Ponzi scheme. Braga and Paradise were aware of these concerns and
`took steps to stop individuals from raising similar concerns, including in the online chat rooms
`and social media channels related to Trade Coin Club. For example, in response to a post on
`September 19, 201