The allegations read: The securities and exchange commission (the "commission"), for its complaint against schad e. Brannon, james e. Franklin, and benjamin f. Daniels et al. , alleges that this action concerns an ongoing, sprawling, fraudulent securities offering through which defendants have defrauded thousands of investors of at least $49 million. Beginning in at least march 2021, and continuing through the present, defendants have unlawfully promoted defendant digital licensing inc.'s (d/b/a "debt box") (herein, "debt box") unregistered, fraudulent offering of so-called "node software licenses," which, as alleged herein, are investment contracts and, accordingly, securities pursuant to federal law. Among other things, defendants, through youtube videos, websites, social media posts, and at live investor events, have promised investors that these "node software licenses" would allow investors to "mine" at least eleven separate crypto assets, and that those crypto assets, in turn, were supported by "real projects tied to real assets." defendants have represented that the value of each crypto asset is tied to profits generated by various underlying businesses performing, inter alia, gold mining, oil drilling, satellite scanning, beverage sales, and other so-called "commodity projects." these representations are false. In reality, the eleven digital asset tokens purportedly being "mined" by the node software licenses cannot be mined and never were mined. Each of the eleven debt box tokens is a bep-20 token created on the binance blockchain ("bnb chain"), which-as here-allows a user to instantly create a specified number of tokens. Each of the eleven categories of debt box crypto assets were generated instantaneously by debt box at the outset of the tokens' creation; the tokens were never generated through "mining" conducted by, or validated through, a "node" or "node license." moreover, the "real projects" and "real assets" defendants tout as supporting the value of these tokens are a sham. Defendants have made numerous representations regarding the underlying businesses purportedly propping up the tokens' value, and those representations are false: the businesses simply did not and do not have the capabilities or revenues defendants repeatedly represented to investors. And rather than use the investor funds generated from the sale of the node software licenses to support those underlying businesses, defendants misappropriated the funds for their own personal gain-buying luxury vehicles and homes, taking lavish vacations, and showering themselves and their friends with cash. This fraudulent, unregistered securities offering continues to expand. Defendants have recently announced they will be offering at least two new node software licenses backed by new, presumably illusory, businesses. In addition, certain defendants recently launched a spin-off offering, the fair project, differing from debt box only in name. In the past two months, certain defendants have taken steps to evade law enforcement. Debt box has stated that it is in the process of moving its operations to the united arab emirates for the express purpose of evading the federal securities laws. In a june 14, 2023, promotional video posted on youtube, defendant jacob ("jake") anderson stated that "we have moved all of [debt box's] operations to abu dhabi" and claimed that debt box is "under the jurisdictional control of abu dhabi, not the sec." on june 26, 2023, defendant ix global, llc-a multi-level-marketing entity through which the debt box node software licenses are promoted-began closing its bank accounts in the united states and has since removed over $720,000 in investor funds from those bank accounts. By reason of the foregoing, brannon directly or indirectly violated, and unless enjoined will continue to, or likely again, violate, sections 5(a) and (c), 17(a)(1), (2) and (3) of the securities act; sections 10(b) and 15(a)(1) of the exchange act and exchange act rule 10b-5.
