The U.S. Securities and Exchange Commission has filed fraud charges against a CFO who embezzled funds to invest in cryptocurrencies. January 3rd Press release.
Defendant Cooper J. Morgenthau was the CFO of African Gold Acquisition Corp., which operated as a special purpose acquisition (SPAC) company arranging mergers and acquisitions between other companies.
Morgenthau’s entire scheme involved theft of over $5 million between June 2021 and July 2022. He initially embezzled $1.2 million in funds directly from his gold in Africa, spending his stolen funds on personal expenses. He also used the funds to trade crypto assets and securities, including “memetic stocks.”
Morgenthau then sought to cover the loss by raising $4.7 million through two series of SPACs called Strategic Metals Acquisition Corp. I and II. However, he soon invested the funds raised in the process back into cryptocurrency.
By August 2022, Morgenthau had lost all of the stolen funds due to poor investments and unrestrained spending, according to previous legal documents.
The SEC alleges that Morgenthau specifically violated the anti-fraud provisions of federal securities laws. He lied to his auditors and accountants, falsified African Gold records, and submitted false certifications to the SEC. He has been barred from holding certain positions and still faces pending financial penalties.
The U.S. Attorney’s Office for the Southern District of New York also announced a concurrent indictment against Morgenthau.
The SEC has run several other crypto-related cases over the past year, reaching a settlement with BlockFi over unregistered products in February 2022. In October, he reached a settlement with Kim Kardashian over his support for the ICO.
In December 2022, the SEC indicted FTX associates Caroline Ellison and Gary Wang for fraud, paralleling the charges in the Southern District of New York.