United States v. Ceo John Doe, et al.

Former cryptocurrency executives David F. Smith, Michael J. Johnson, and Sarah L. Chen were charged by the SEC for misappropriating $1.2 billion in customer funds.

The SEC charged David F. Smith, Michael J. Johnson, and Sarah L. Chen with orchestrating a $1.2 billion fraud scheme involving misappropriated customer assets. The defendants face charges of securities fraud, insider trading, and false filings under the Securities Exchange Act of 1934. The resolution requires $850 million in disgorgement and penalties, with Smith and Johnson receiving permanent trading bans.

The U.S. Securities and Exchange Commission (SEC) charged three former cryptocurrency exchange executives—David F. Smith, Michael J. Johnson, and Sarah L. Chen—for orchestrating a multi-year fraud scheme. The executives misappropriated over $1.2 billion in customer funds to cover operational shortfalls and personal expenses. To hide the deficit, they falsified financial statements and created artificial trading volumes. The SEC filed charges including securities fraud, insider trading, and violations of the Securities Exchange Act of 1934. The case resulted in a total settlement of $850 million in disgorgement, interest, and civil penalties. Additionally, David F. Smith and Michael J. Johnson were hit with permanent trading bans.