The U.S. Securities and Exchange Commission announced on March 11, 2021 that it filed an emergency action and obtained a temporary restraining order and asset freeze against Shawn Cutting of Sandpoint, Idaho.
According to the SEC’s complaint, from October 2017 through at least May 2020, Cutting raised at least $6.9 million from over 450 investors by representing that he would pool investor monies into a fund that invested in various digital assets. The complaint alleges that Cutting falsely represented to investors that he had worked as a financial adviser for years and that he held securities licenses. The complaint also alleges that Cutting misappropriated at least hundreds of thousands of dollars of the funds raised from investors, using the money to pay for personal expenses including home improvements, cars, and his daughter’s wedding. Cutting allegedly convinced investors that he was trading profitably and induced them to make additional investments by emailing investors fictitious updates that described purported trading and investment returns, at times touting gains exceeding 50% in a single month. The complaint further alleges that Cutting prolonged the fraud by making at least $760,000 in Ponzi-like payments to investors.
The complaint charges Cutting with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks emergency relief, as well as a permanent injunction, disgorgement of allegedly ill-gotten gains with prejudgment interest, and a civil penalty.