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`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`
`SEATTLE DIVISION
`
`
`SECURITIES AND EXCHANGE COMMISSION,
`
`Plaintiff,
`
`v.
`
`JONATHAN TETREAULT,
`
`
`
`Defendant.
`
`No. 2:22-cv-01567
`
`
`
`COMPLAINT
`
`
`
`
`
`
`
`
`
`
`
`Plaintiff Securities and Exchange Commission (the “SEC”) alleges:
`SUMMARY OF THE ACTION
`1.
`Trade Coin Club was a fraudulent international offering scheme that collected
`more than 82,000 bitcoin, worth approximately $295 million at the time, from more than
`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. The creator
`and primary beneficiary of Trade Coin Club was Douver Torres Braga (“Braga”).
`2.
`Among other evidence, blockchain analysis reveals that, in reality, Trade Coin
`Club operated in a manner consistent with a Ponzi scheme. Specifically, Trade Coin Club had
`
`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`1
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 2 of 10
`
`
`
`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
`trading platforms.
`3.
`To recruit new investors to join Trade Coin Club, Braga implemented a pyramid
`scheme-like referral system to reward existing members for recruiting new investors. The
`individuals recruited by Braga directly or indirectly included Joff Paradise (“Paradise”), who
`used the title “Director of the United States” for Trade Coin Club, and Keleionalani Taylor
`(“Taylor”), the largest U.S. promoter of Trade Coin Club. The SEC has filed a separate
`complaint in this same Court alleging violations of the federal securities laws by Braga, Paradise,
`and Taylor.
`4.
`Taylor’s Trade Coin Club network included Defendant Jonathan Tetreault
`(“Tetreault”), who received 158.78 bitcoin worth $626,435 at the time as compensation for
`promoting Trade Coin Club and soliciting investors.
`5.
`The Trade Coin Club “membership packages” were offered and sold as
`investment contracts, and therefore securities, under the federal securities laws. Tetreault
`offered and sold the Trade Coin Club securities without registration, and without qualifying for
`any exemption from registration.
`6.
`In early 2018, Trade Coin Club announced that it would discontinue services to
`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, many investors could no
`longer access any assets in their Trade Coin Club accounts.
`JURISDICTION AND VENUE
`7.
`The SEC brings this action pursuant to Sections 20(b), 20(d), and 22(a) of the
`Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections
`
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`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`2
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

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`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 3 of 10
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`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].
`8.
`This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1),
`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].
`9.
`Defendant Tetreault, directly or indirectly, made use of the means or instruments
`or 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.
`10.
`Venue is proper in this District pursuant to Section 22(a) of the Securities Act
`[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.
`DEFENDANT
`Jonathan Tetreault (“Tetreault”) is 43 years old and resides in Hubbardston,
`11.
`Massachusetts.
`
`BACKGROUND REGARDING TRADE COIN CLUB
`Braga Established Trade Coin Club and Recruited Paradise as the Lead Promoter in
`the United States.
`12.
`In 2016, Braga established Trade Coin Club, a multi-level marketing program that
`promised profits purportedly made from a proprietary crypto asset trading software or “bot,” as
`well as commissions for recruiting new investors.
`13.
`Investors participated in Trade Coin Club by creating a user account on the
`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
`
`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.
`3
`COMPLAINT
`
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 4 of 10
`
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`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.
`14.
`The Trade Coin Club Back Office displayed what appeared to be up-to-date
`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.
`15.
`In late 2016, Braga recruited Paradise to be a founding member of Trade Coin
`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 and Paradise Developed a Large Investor Recruiting Network, Including Taylor
`and Tetreault
`16.
`Beginning in December 2016, Braga pitched Trade Coin Club to contacts in the
`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”).
`17.
`In the December 16, 2016 Kickoff Video, Braga highlighted, among other things,
`(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.
`The Trade Coin Club Back Office contained marketing materials for the program, which
`included the Trade Coin Club slide deck that Braga presented, translated into twenty languages.
`18.
`Paradise enrolled in Trade Coin Club on December 16, 2016, the day Braga’s
`Kickoff Video was posted online. Braga and Paradise promoted Trade Coin Club widely, and a
`number of their speeches and presentations were recorded and posted online.
`
`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`4
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 5 of 10
`
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`19.
`In their speeches and presentations, Braga and Paradise also touted the
`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.
`20.
`Trade Coin Club offered three levels of membership titled “Apprentice,”
`“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.
`21.
`Trade Coin Club provided five categories of commissions for members who
`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.”
`22.
`In addition to the compensation plan, Braga announced a promotion for the first
`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
`23.
`From December 2016 to May 2018, Trade Coin Club collected a total of 82,648
`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.
`24.
`Trade Coin Club investor deposits peaked in June 2017, and investor withdrawals
`started to exceed deposits by September 2017.
`25.
`In November 2017, Trade Coin Club introduced its own crypto asset named
`TCoin. In or around January 2018, Trade Coin Club announced that it was withdrawing from
`
`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`5
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 6 of 10
`
`
`
`the United States and closing U.S. residents’ accounts. In February 2018, Trade Coin Club
`announced that it would no longer pay withdrawals in bitcoin but would require investors to
`withdraw funds in TCoin instead.
`26. 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
`27.
`Blockchain analysis confirms that Trade Coin Club operated consistent with a
`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.
`28.
`Trade Coin Club maintained custody of the bitcoin directly and processed
`transactions directly on the Bitcoin blockchain.
`THE TRADE COIN CLUB MEMBERSHIP INTERESTS WERE SECURITIES
`The Trade Coin Club Membership Interests Were Offered and Sold as Investment
`Contracts, and Therefore Securities, Under the Federal Securities Laws
`29.
`The membership interests in Trade Coin Club that Tetreault offered and sold
`constituted “securities” under the federal securities laws. The definition of “security” includes a
`range of investment vehicles, including “investment contracts.” Investment contracts are
`instruments involving the investment of money in a common enterprise with the reasonable
`expectation of profits to be derived from the entrepreneurial or managerial efforts of others.
`30.
`Investors in the Trade Coin Club offering reasonably viewed the offering as an
`opportunity to profit from the purported crypto asset trading software that was described in the
`Trade Coin Club slide deck and other promotional materials. The potential success of the
`investments depended on the success of Trade Coin Club’s operations, namely trading crypto
`assets.
`
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`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`6
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 7 of 10
`
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`TETREAULT VIOLATED THE SECURITIES REGISTRATION AND BROKER-
`DEALER REGISTRATION PROVISIONS OF THE FEDERAL SECURITIES LAWS
`Tetreault Offered and Sold Investments in Trade Coin Club and Earned Commissions
`Without Registration or Qualifying for an Exemption Under the Federal Securities Laws
`31.
`Tetreault paid 0.30 bitcoin for a Trade Coin Club membership on or around
`December 31, 2016. Tetreault paid an additional 1 bitcoin on or around January 16, 2017.
`32.
`Beginning in January 2017, Tetreault distributed English and Spanish versions of
`the TCC slide deck, links to TCC-related information, and his registration link to people in his
`network, including by email. Investors were required to use a registration link from another
`member in order to access the Trade Coin Club website and make an investment.
`33.
`Tetreault promoted Trade Coin Club widely including online and at in-person
`events.
`34.
`On August 11, 2017, Tetreault posted on a Facebook group moderated by Taylor
`named “Team Mega” that because of TCC “I was able to not only set myself free but also set my
`wife free as well,” with his wife clarifying in a comment that Tetreault “left his full-time job” in
`or around June 2017 after being in TCC for less than six months.
`35.
`Tetreault also traveled abroad in connection with his work recruiting investors for
`Trade Coin Club, including to Ireland in April 2017, Belize in July 2017, the Philippines in
`September 2017, and Thailand in November 2017.
`36.
`Tetreault directly sponsored 69 Trade Coin Club members who invested a total of
`79.30 bitcoin worth $120,625 at the time. On September 29, 2017, Taylor posted on the TCC
`Team Mega Facebook chat that Tetreault’s network had grown to 10,000 members. From
`February 1, 2017 through December 28, 2017, TCC paid Tetreault a total of 158.78 bitcoin,
`worth $626,435 at the time. These funds compensated Tetreault for the investors he recruited
`into Trade Coin Club, including pursuant to the “compensation plan” described above.
`TOLLING AGREEMENT
`37.
`On February 7, 2022, Defendant Tetreault and his counsel signed a tolling
`agreement with the Commission. The tolling agreement specifies a period of time (a “tolling
`
`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`7
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 8 of 10
`
`
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`period”) in which the “running of any statute of limitations applicable to any action or
`proceeding against [the defendant] authorized, instituted, or brought by or on behalf of the
`Commission or to which the Commission is a party arising out of the investigation (‘any
`proceeding’), including any sanctions or relief that may be imposed therein, is tolled and
`suspended for the period beginning on January 28, 2022 through July 28, 2022 … .” The tolling
`agreement further provides that Tetreault and any of his agents or attorneys “shall not include the
`tolling period in the calculation of any running of the statute of limitations or for any other time-
`related defense applicable to any proceeding, including any sanctions or relief that may be
`imposed therein, in asserting or relying upon any such time-related defense.”
`38.
`On September 1, 2022, Defendant Tetreault signed a second tolling agreement
`with the Commission and his counsel signed the agreement approving as to form on September
`2, 2022. The second tolling agreement set forth the same substantive terms described above and
`specified an additional tolling period of August 19, 2022 through November 19, 2022.
`FIRST CLAIM FOR RELIEF
`Violations of Sections 5(a) and 5(c) of the Securities Act
`39. The SEC re-alleges and incorporates by reference paragraph numbers 1 through
`
`388.
`
`40. By reason of the foregoing, (a) without a registration statement in effect as to that
`security, Defendant Tetreault, directly and indirectly, made use of the means and instruments of
`transportation or communications in interstate commerce and of the mails to sell securities
`through the use of means of a prospectus, and (b) made use of the means and instruments of
`transportation or communication in interstate commerce and of the mails to offer to sell through
`the use of a prospectus, securities as to which no registration statement had been filed.
`41. By reason of the foregoing, Defendant Tetreault directly or indirectly violated,
`and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c) of the
`Securities Act [15 U.S.C. §§ 77e(a) and (c)].
`
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`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`8
`
`
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`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 9 of 10
`
`SECOND CLAIM FOR RELIEF
`Violations of Section 15(a) of the Exchange Act
`42. The SEC re-alleges and incorporates by reference paragraph numbers 1 through
`
`
`
`388.
`
`43. By engaging in the conduct described above, Defendant Tetreault, directly or
`indirectly, through use of the means or instruments of transportation or communication in
`interstate commerce or the mails, acted as a broker and/or effected transactions in, and induced
`or attempted to induce the purchase or sale of, securities (other than an exempted security or
`commercial paper, bankers’ acceptances or commercial bills) without being registered with the
`Commission in accordance with Section 15(b) of the Exchange Act [15 U.S.C. § 78o(b)].
`44. By reason of the foregoing, Defendant Tetreault violated, and unless restrained
`and enjoined will continue to violate, Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].
`PRAYER FOR RELIEF
`WHEREFORE, the SEC respectfully requests that this Court:
`I.
`Permanently restrain and enjoin Defendant Tetreault from, directly or indirectly,
`violating Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)] and Section
`15(a) of the Exchange Act [15 U.S.C. § 78o(a)].
`II.
`Permanently restrain and enjoin the Defendant Tetreault from directly or indirectly (1)
`offering, operating, or participating in any marketing or sales program in which the participant is
`compensated or promised compensation solely or primarily for (a) inducing another person to
`become a participant in the program; or (b) if such induced person induces another to become a
`participant in the program; and (2) participating directly or indirectly in any offering of crypto
`asset securities for a period of five years; provided, however, that such injunction shall not
`prevent him from purchasing or selling crypto asset securities for his own personal accounts.
`
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`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`9
`
`
`
`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`

`

`Case 2:22-cv-01567 Document 1 Filed 11/03/22 Page 10 of 10
`
`
`
`III.
`Order Defendant Tetreault to disgorge all ill-gotten gains he received directly or
`indirectly, with prejudgment interest thereon, as a result of the alleged violations, pursuant to
`Section 21(d)(3), (5), and (7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), (5), and (7)].
`IV.
`Order Defendant Tetreault to pay civil monetary penalties pursuant to Section 20(d) of
`the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
`78u(d)(3)].
`
`V.
`Retain jurisdiction of this action in accordance with the principles of equity and the
`Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
`decrees that may be entered, or to entertain any suitable application or motion for additional
`relief within the jurisdiction of this Court.
`
`VI.
`Grant such other and further relief as this Court may deem just, equitable, and necessary.
`Dated: November 3, 2022
`
`
`
`
`Respectfully submitted,
`
`
`_s/ Serafima Krikunova McTigue
`Serafima Krikunova McTigue
`(Conditionally Admitted Pursuant to LCR
`83.1(c)(2))
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`Telephone: (415) 705-2500
`Facsimile: (415) 705-2501
`Email: mctigues@sec.gov
`Attorney for Plaintiff Securities and
`Exchange Commission
`
`
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`COMPLAINT
`SEC V. TETREAULT (NO. 2:22-CV-01567)
`
`10
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`
`
`Securities and Exchange Commission
`44 Montgomery Street, Suite 2800
`San Francisco, California 94104
`(415) 705-2500
`
`