US SEC Traces $3.5M Back To Alleged Fraudster Behind Fake Crypto Mine

Recent charges from the U.S. Securities and Exchange Commission (SEC) tied three parties to $3.5 million in fraudulent activities. 

The SEC has pressed charges of fraud against Donald Blakstad, crypto mining outfit Energy Sources International Corporation (ESI) and vehicle part company Xact Holdings Corporation, according to a Jan. 8 document from the commission. 

The document described ESI as “a purported cryptocurrency mining operation.”

Millions swindled

Blakstad allegedly gathered $3.54 million from at least 14 different investors via fraudulent offerings, the document detailed. 

Blakstad touted possession of three businesses, vending supposed securities in those operations. Blakstad, however, did not put investors’ money toward such securities. Instead, he harnessed that capital for individual gain, buying part of a nightclub and a car, among other things, the SEC’s complaint said. 

The alleged fraudster used ESI, Xact holdings and energy company Midcontinental Petroleum, Inc. as part of his operation, shilling falsified information to lure investors into participation, the document also noted. 

Not his first offense

The SEC also charged Blakstad with accounts of insider trading in 2019, as detailed in a July 10 statement from the commission. 

According to the SEC, Blakstad bribed accountant Martha Patricia Bustos for information on her employer, Illumina Inc. Blakstad used the private information he received from Bustos to profit in the stock market, the statement said.

In February 2019, Cointelegraph also reported on Wong Ching-kit’s arrest for his participation in a fraudulent crypto mining operation.