SEC v. BKCOIN MANAGEMENT, LLC; and MIN WOO KANG a/k/a KEVIN KANG, No. 1:23-cv-20719, Southern District of New York (Mar. 6, 2023) — Complaint

Sealed
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
SECURITIES AND EXCHANGE COM M ISSION,
Plaintiff,
V.
BKCOIN M ANAGEM ENT, LLC and
M IN W OO KANG a/k/a RKEVINM K ANG,
Defendants, and
BKCOIN CAPITAL, LP, :
BK OFFSHORE FUND, LTD.,
BKCOIN M ULTI-STRATEGY
M ASTER FUND, LTD.,
BKCOIN M ULTI-STRATEGY FUND, LP, :
BKCOIN M ULTI-STM TEGY FUND LTD., AND
BISON DIGITAL LLC,
Relief Defendants.
CASE NO.
FILED BY D.C.
FE8 23 2223
tNEGlarl1l'ls%%ey.C
S. D. OF FLA. - MlAMl
COM PLAINT FOR INJUNCTIVE AND OTHER RELIEF
Plaintiffsecurities and Exchange Commission (the ûdcommission'') alleges as follows:
1. SUM M ARY
1 .    The Commission brings this action to prevent further fraud and m isappropriation
of investor money by BKcoin Management, LLC (1GBKCoin''), an exempt reporting investment
adviser, and one of its two managing members, Min Woo Kang a/k/a ûlKevin'' Kang (û1Kang'')
(collectively, EçDefendants'). From at least October 201 8 through September 2022 (the ltRelevant
Period''), BKcoin served as the investment adviser to the following five private funds formed to
generate profits primarily through investments in crypto assets:l Blkcoin Capital
, LP (the ddlwegacy
lCrypto assets are unique digital assets maintained on a cryptographically-secured blockchain
. A blockchain or
distributed ledger is a peer-to-peer database spread across a network of computers that records aI1 transactions in
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for

Fund'') BK Offshore Fund, Ltd. (the Ssoffshore Fund''), and three :lM ulti-strategy'' funds:
BKcoin Multi-strategy M aster Fund, Ltd., and its two feeder funds, BKcoin M ulti-strategy Fund,
LP and BKcoin Multi-strategy Fund Ltd. (the ddMulti-strategy Fundf') (all funds collectively, the
ûûBlkcoin Funds').  During that time, BKcoin also managed separately managed accounts
($$SMAs'') for certain clients.
During the Relevant Period, Defendants raised nearly $100 million from at least 55
investors, who invested in one or more of the five Blkcoin Funds (approximately $94.5 million),
or through an SMA managed by BKcoin (approximately $5 million).  Defendants assured
investors and prospective investors in fund offering documents, investor agreements and other
communications that their funds would be used primarily to trade in crypto assets, and represented
that BKcoin would generate returns for investors in the BKcoin Funds or SM AS through specitic
investment strategies focusing on crypto assets. BKcoin also sent marketing presentations to at
least 1 8 investors or prospective investors claiming that BKcoin or one of the M ulti-strategy
Funds received a US opinion from a ûltop four auditor.''
These statements were false or materially misleading. ln fact, during the Relevant
Period, Defendants disregarded the BKcoin Funds' structures, commingled investor assets, and
used over $3.6 million to make Ponzi-like payments to fund investors. Relief defendant Bison
Digital LLC (llBison Digital''), a sixth crypto fund that had no investors except for Kang and the
other managing member of BKcoin, received $l2 million from BKcoin and the BKcoin Funds
for no apparent or legitimate reason. Kang also used BKcoin Funds' and SM A investors' funds
for personal use, misappropriating at least $371,000 of investor funds to pay for vacations, tickets
secure recording of transactions. Crypto tokens may be traded on crypto asset trading platforms in exchange for
other crypto assets or fiat currency (legal tender issued by a country).

to sporting events, trade crypto assets in his personal accounts, and to purchase an apartment in
New York City. Contrary to its claims of having an opinion from a tstop four auditor
,
'' neither
BKcoin nor any of the BKcoin Funds have received an opinion from any audit firm .
4.   Kang attempted to conceal from investors Defendants' unauthorized use of funds,
by sending altered documents with intlated bank account balances to the third-party fund
administrator for the M ulti-strategy Funds. The administrator incorporated this false information
into the performance reports that were sent to investors.
By October 2022, however, Defendants' fraudulent scheme started to collapse.
BKcoin suspended Kang from employment and notified investors that it was suspending
redemption requests and capital withdrawals from the Blkcoin Funds
. On October 28, 2022,
BKcoin filed an Emergency Petition for Appointment of Receiver in the Circuit Court for the
Eleventh Judicial Circuit in and for M iam i-Dade County Florida, seeking appointment of a
receiver over the M ulti-strategy Funds, which was granted and subsequently expanded to include
the Legacy Fund and the Offshore Fund.z Of the nearly $100 million that BKcoin raised from
investors, tens of millions of dollars are unaccounted for.
By engaging in the conduct set forth in this Complaint, Defendants violated Section
17(a) of the Securities Act of 1933 (ddsecurities Act'') (1 5 U.S.C. j 77q(a)1, Section l 0(b) of the
Securities Exchange Act of 1934 (ûdExchange Act'') gl 5 U.S.C. j 78j(b)1, Exchange Act Rule l0b-
5 (17 C.F.R. j 240.1 0b-51, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940
CEAdvisers Act'') (15 U.S.C. jj 80b-6(l), 80b-6(2)1.
Unless enjoined, Defendants will continue to violate the federal securities laws.
Among other relietl the Commission seeks permanent injunctions, disgorgement with prejudgment
2 See BKcoin Management LLC et al
.
v. BKcoin Multi-strategy Fund 1/J et al., Case No. 2022-020760-CA-0 1
(Fla. 1 1th Circ. Ct. 2022).
3

interest, and civil penalties against Defendants. The Commission also seeks an order against Kang'.
(i) enjoining Kang from participating in the offer or sale of securities, including crypto asset
securities, except for transactions in his own personal account; and (ii) imposing an officer and
director bar. Additionally, the Commission seeks disgorgement and prejudgment interest against
Relief Defendants. To protect investors and prevent further dissipation of assets, the Commission
also seeks asset freezes and other emergency relief against Defendants and Relief Defendants.
IL DEFENDANTS AND RELIEF DEFENDANTS
A.   Defendants
8.    Kang, age 33, resides in New York, New York. Kang co-founded BKcoin and is
one of its two managing members. In October 2022, BKcoin suspended Kang from employment.
Kang is a Chartered Financial Analyst, however, he is not registered with the Commission and
holds no securities licenses.
BKcoin is a Delaware limited liability company with its principal place of business
in M iami, Florida. Since November 2018, BKcoin has tiled reports with the Commission as an
exempt reporting adviser. In its most recent Form ADV filing with the Commission on M arch 29,
2022, BKcoin reported assets under management of approximately $70 million. During at least
the Relevant Period, BKcoin served as the investment adviser to the BKcoin Funds and SMAS
managed for individual and institutional investors.
B.   Relief Defendants
l0.   The Legacy Fund, formed in 201 8, is an unregistered fund organized as a Delaware
lim ited partnership. The Legacy Fund was formed primarily for the purpose of investing in crypto
assets.
4

l 1 .   The Offshore Fund, formed in 20l 9, is an unregistered fund organized under the
laws of the British Virgin Islands. The Offshore Fund was formed primarily for the purpose of
investing in crypto assets.
12.  BKcoin Multi-strategy Master Fund Ltd. (isMaster Fund''), formed in 2022, is an
unregistered fund organized under the laws of the British Virgin lslands.It serves as the master
fund in a master-feeder structure, with BKcoin M ulti-strategy Fund LP and BKcoin M ulti-
Strategy Fund Ltd. as the feeder funds. The M ulti-strategy M aster Fund was formed for the
purpose of investing in crypto assets.
BKcoin M ulti-strategy Fund LP, formed in 2021 , is an unregistered fund
organized as a Delaware limited partnership, and is the domestic feeder fund for the Master Fund.
l4.   BKcoin M ulti-strategy Fund Ltd., formed in 2022, is an unregistered fund
organized under the laws of the British Virgin Islands, and is the offshore feeder f'und for the
M aster Fund.
l 5.   Bison Digital, LLC formed in 2019, is an unregistered fund organized as a
W yoming limited liability company. Kang co-founded Bison Digital, LLC and is one of its two
managing members. Bison Digital, LLC has no other investors.
111. JURISDICTION Ae  VENUE
16.  This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1),
22(a), and 22(c) of the Securities Act (15 U.S.C. jj 77t(b), 77t(d)(1), 77v(a), and 77v(c)1; Sections
2l(d), 27(a), and 27(b) of the Exchange Act gl 5 U.S.C. jj 78u(d), 78aa(a), and 78aa(b)1; and
Sections 209(d), 2 l4(a), and 2 l4(b) of the Advisers Act (15 U.S.C. jj 80b-9(d), 80b-14(a), and
80b-14(b)1.

l 7.  The Court has personal jurisdiction over the Defendants and venue is proper in the
Southern District of Florida because: (a) many of Defendants' acts and transactions constituting
violations of the Securities Act, the Exchange Act, and the Advisers Act occurred in this District;
(b) BKcoin's principal place of business is in this District; and (c) some of the BKcoin Funds'
investors reside in this District.
l 8.   ln connection with the conduct alleged in this Complaint, Defendants, directly and
indirectly, singly or in concert with others, made use of the means or instrumentalities of interstate
commerce, the means or instruments of transportation and communication in interstate commerce,
and the mails.
IV. FACTUAL ALLEGATIONS
A.   Defendants Raised Nearly $100 M illion From Investors W ho Invested in
BKcoin Funds or Through SM AS
l9.   Kang co-founded BKcoin in 20l 8, ostensibly for advising domestic and offshore
investment funds focused primarily on investing in crypto assets. Over the course of the next four
years, Kang and others formed the five BKcoin Funds, which Defendants offered to investors.
BKcoin serves as the investment adviser to the five BKcoin Funds. BKcoin also provided
investment advisory services to individual and institutional investors who opted to invest in crypto
assets through SMAS.
20.   The Legacy Fund, formed by Kang and others in M arch 201 8, was the first private
fund for which BKcoin served as General Partner and investment adviser.  According to its
website during the Relevant Period, the Legacy Fund invests primarily in crypto assets and its
investment strategy was to pursue a (smarket neutral strategy (thatj exploits price inefficiencies and
volatility within cryptocurrency markets and digital asset markets by applying proprietary
algorithms to our statistical arbitrage and long/short investment strategies.''

ln 2019, Kang and others formed the Offshore Fund, primarily for the purpose of
investing in crypto assets, and for which BKcoin served as the investment adviser. A Term Sheet
distributed to investors for the Offshore Fund states that its investment objective and strategy is to
ûûdeliver uncorrelated, absolute returns of 10-15% annually by using statistical arbitrage strategy''
as well as tGleverage'' as part of the investment strategy.
22.   Kang and others formed the Multi-strategy Funds in 2021 and 2022, also for the
purpose of investing in crypto assets utilizing various trading strategies. According to a marketing
document provided to investors and prospective investors, the M ulti-strategy Funds were
ûsdesigned to give investors returns across a broad spectrum of strategies'' involving crypto assets.
23.   During the Relevant Period, BKcoin raised approximately $100 million from more
than 55 investors who invested in the BKcoin Funds or through SMAS.Approximately $94.5
million of these funds wcre invested in the Legacy Fund ($67.87 million), the Multi-strategy
Funds ($l 8.7 million), and the Offshore Fund ($7.94 million). At least seven investors invested
approximately $5 million into SMAS managed by BKcoin.
24.   During the Relevant Period, according to fund offering documents, BKcoin
charged a two percent and six percent yearly advisory fee for the investment advisory services it
provided to the Legacy Fund and Offshore Fund, respectively.
25.   The interests sold by the Blkcoin Funds are securities within the meaning of
Section 2(a)(l) of the Securities Act, Section 3(a)(10) of the Exchange Act, and Section 202(a)(l 8)
of the Advisers Act (15 U.S.C. jj 77b(a)(1), 78c(a)(l0), and 80b-2(a)(l 8)1.

B.   Defendants M ade M aterial M isrepresentations and Omissions to Investors in
Connection with the Offering of BKcoin Fund Investm ents and SM AS
(1) Defendants ' Misrepresentations and Omissions About the Use ofFunds
In BKcoin Funds' offering documents and limited partnership agreements with
investors, BKcoin represented to investors and prospective investors that it would use investor
funds for authorized pumoses, namely investments in crypto assets.
27.   For example, the limited partnership agreements for the Legacy Fund and BKcoin
M ulti-strategy Fund LP, dated August 28, 2020 and M arch 3, 2022, respectively, authorize
BKcoin to, among other things, ttacquire, invest in, hold, pledge, manage, sell, transfer, operate,
or otherwise deal in or with the Portfolio Investments,'' a term defined to include crypto assets.
28.   During the Relevant Period, BKcoin M ulti-strategy Fund Ltd. distributed to
prospective investors and investors a private placement memorandum dated M arch 3, 2022, that
stated its investment objective was to tlgenerate superior risk adjusted returns through a variety of
innovative alpha-generating investment strategies, which are, in each case, related to the digital
asset space.''
Similarly, the investment agreements with the SMA holders authorize BKcoin ttto
supervise and direct the investment and reinvestment of '
investment guidelines.
crypto aSSetS, subject to specific
30.   Further, on September 7 and October 14, 2021, Kang represented to at least one
Legacy Fund investor that investor funds would be used to trade in crypto assets.
Based on these documents and statements, BKcoin and Kang led investors to
believe that BKcoin and the BKcoin Funds would use investors' money to trade in crypto assets
in order to return profits in which investors would share, and that Blkcoin would be entitled to
certain management fees.

32.   Contrary to these representations about the use of investor funds, Defendants
disregarded BKcoin Funds' structures, comingled millions of investors' funds among the BKcoin
Funds, and misappropriated investors' funds for unauthorized purposes. Kang misappropriated at
least $371 ,000 of investor funds to finance his Iavish lifestyle and trade in crypto assets for his
own benefit, as described in paragraphs 41 to 45 below.  Furthermore, Defendants looted
substantially all investor deposits for the M ulti-strategy Funds, transferring millions to BKcoin's
and the Offshore Fund's bank accounts. Defendants then used at least $3.6 million of the funds
transferred from the M ulti-strategy Funds to make Ponzi-like distributions to investors in the
Legacy Fund and an SM A client, as described in paragraphs 46 to 49 below.
(2) BKcoin Falsely Stated to Investors That 1t, or one of the Multi-strategy
.
, îFunds
,
Had Received an Opinionfrom a GF/# Four ' Auditing Firm
BKcoin also materially misrepresented to certain investors that Blkcoin, or one of
the M ulti-strategy Funds, had received an opinion from a ûûtop four'' auditing tirm . ln marketing
presentations delivered to certain investors in the Multi-strategy Funds, BKcoin knowingly
represented that it was ûûone of the only firms with a US opinion from a top four auditor.''
34.   For example, on M ay 23, 2022, an investment relations professional from BKfoin
emailed an investor and copied Kang with ttsome recent updates to our marketing materialsg.l''
Atlached to the email were two marketing documents that stated BKcoin or one of the M ulti-
Strategy Funds ttis also one of the only firms with a US opinion from a top four auditor . . .(.155
On M ay 24, 2022, an investment relations professional from BKcoin emailed a
prospective investor (and also copied Kang) two tûupdated marketing documents'' that stated
BKcoin or one of the M ulti-strategy Funds ttis also one of the only firms with a US opinion from
a top four auditor . . .(.155 A little over a month later on June 30, 2022, the prospective investor
deposited $1 .3 million in a Multi-strategy Funds account.

36.   BKcoin emailed versions of one or both of these two ûdmarketing documents'' to at
least l 8 additional prospective investors of the M ulti-strategy Funds. Kang was copied on l l of
those emails and also sent several of those emails to prospective investors.
37.   Contrary to this representation, at no time did BKcoin, or any of the BKcoin Funds
(including the Multi-strategy Funds), receive an opinion from a top four auditor, or any other
auditor.
38.   All of the misrepresentations and omissions about the use of funds and the audit
opinion, individually and in the aggregate, are material. There is a substantial likelihood that a
reasonable investor in the BKcoin Funds would consider the misrepresented facts and omitted
information regarding how their money would be invested, the safety of those investments, and
whether BKcoin or the Multi-strategy Funds had received an audit opinion, to be important,
and/or the disclosure of the omitted facts or accurate information would alter the iitotal mix'' of
information available to investors.
Defendants' M isappropriation and M isuse of Investor Funds, and Kang's
Efforts to Conceal His M isconduct
39.   During the Relevant Period, Kang had access to BKcoin's and the BKcoin Funds'
assets. Kang had access to and authority over domestic and, on information and beliet offshore
bank accounts for BKcoin and the BKcoin Funds, and over crypto asset trading accounts
maintained with at least nine crypto asset trading platforms. Kang had access to and authority over
certain bank and crypto asset trading accounts held by BKcoin or the BKcoin Funds.
40.   Despite his obligation to investors as a fiduciary, and representations to investors
about the use of investor funds, during the Relevant Period, Kang repeatedly used investor funds
for unauthorized and undisclosed purposes. M oreover, Kang tried to conceal his misconduct by
altering information used to generate statements sent to investors.
10

(1) Kang 's Misappropriation oflnvestor Fundsfor Personal Use
During the Relevant Period, Kang knowingly misappropriated at least $371,000 of
investor funds for his personal use.
42.   During October 201 8, Kang transferred approximately $1 l ,000 of Legacy Fund
investor money to his personal account at a crypto asset trading platform .
43.   In April 2021, Kang wired approximately $35,000 from a BKcoin bank accounty
to a third party in order to rent a vacation house in Montauk, New York. The $35,000 had been
sourced from two SM A clients' investments, which were originally deposited into a BKcoin bank
account.
44.   From M ay 2021 through July 2022, Kang also knowingly misappropriated at least
$83,000 in investor funds to make payments to a credit card issued to the Legacy Fund. Kang
charged personal expenses to the Legacy Fund credit card, including travel to the Caribbean,
tickets to sporting events, and fine dining.
45.   In May 2022, Kang purchased a $2.4 million apartment in New York City in the
name of the Offshore Fund, partially using investor funds. Specifically, on M arch 18, 2022, Kang
sent a wire transfer in the amount of $242,000, representing the down payment for the apartment,
from an Offshore Fund bank account to a boutique Iaw firm in New York that provides services
concerning the purchase, sale, and financing of real estate.

(2) Defendants Commingled Fund Assets and Used at Least $3.6 Million of
M ulti-strategy FundAssets to M ake Ponzia ike Payments to L egacy Fund and
SM A Investors
46.   Defendants disregarded the BKcoin Funds' structure and diverted assets between
the separate funds. During the Relevant Period, Defendants made l 04 transfers worth over $122
million between bank accounts held by the BKcoin Funds and Bison Digital.
47.   For example, between June and July 2022, Defendants diverted $15.6 million of
investor deposits for the M ulti-strategy Funds to Offshore Fund and BKcoin bank accounts. The
chart below illustrates the movement of investor dollars (shown in green), between the accounts.
$ l *34 (p00 Otber I;<
; oé yup:sI
i $395.:%  Legacy FundI
jl-pjztjutuz  gywe-sior #);; i
Multi-strategy  l . lMulti-strategy $ l 7
.708.000 s 13
.
5r.t, ooo   ofrskore Fund  s 1 :47 t)oo  I-qac) FaptlF
npdsF
unds Investors l Actouwt Acceuat   tA
ccellnts   1l1
t .I!..M.-. epMm  Legacy Fundl '-  IF
liklii-jà ' 'otker spumes   $ 3,163,(*0 , 07,26 2 Im.ezlor *2
af Fuds pBlœ
eial $2 oeo 0(k(p &z
,(*0.(*0  BKCOK MaRagementu
--.
z---?.-. yjasagemeut (46
.48/:0:2 .&-u.1 Cilent #1A
ccount
48.   As depicted in the chart, Defendants transferred $13.55 million of investor
deposits into the M ulti-strategy Funds to an Offshore Fund account. Defendants then transferred
$1 .65 million of those funds to a Legacy Fund account.
satisfy redemptions for two investors of the Legacy Fund.
Finally, Defendants used those funds to
49.   Similarly, Kang transferred $2 million of investor deposits into the Multi-strategy
Funds to a BKcoin account, and then immediately paid those funds to an SMA investor.
(3) Kang Fals6ed Documents To Conceal the Unauthorized Transfers and
M isappropriation
50.   Kang attempted to conceal his misappropriation and m isuse of investor funds by
knowingly providing documents with fictitious bank account balances to the third-party fund
administrator for the M ulti-strategy Funds.
12

5 l .   The documents that Kang provided to the third-party fund administrator overstated
the account balances in a bank account held by BKcoin M ulti-strategy Fund, LP by $9.4 million
in June 2022, $15.55 million in July 2022, and $15.56 million in August 2022.
52.   The third-party fund adm inistrator incorporated the tictitious bank account
balances into the performance reports for June 2022
,
July 2022 and August 2022 that were
delivered to investors in the M ulti-strategy Funds.  As a result, these performance reports
displayed materially misleading information about the performance of the M ulti-strategy Funds
.
D. Defendants' Fraudulent Scheme Unravels
53.   In October 2022, BKcoin suspended Kang from employment. BKcoin sent letters
to investors in the Blkcoin Funds, informing them that it was suspending the acceptance of
additional capital, the determination of Net Asset Value, and redemption payments or capital
account withdrawals.
54.   On October 18, 2022, an investor in one of the SM AS managed by BKcoin filed
suit against BKcoin, Kang, and others alleging breach of fiduciary duty and aiding and abetting
breach of fiduciary duty.3  On October 28
,
2022, BKcoin filed an Emergency Petition for
Appointment of Receiver in the Circuit Court of the Eleventh Judicial Circuit in and for M iami-
Dade County Florida, seeking appointment of a receiver over the M ulti-strategy Funds
,
which was
granted and subsequently expanded to include the Legacy Fund and the Offshore Fund
.
4 The
temporary receiver appointed in that action reported that the approximate value of all cash and
crypto assets recovered as of January 4, 2023 was only $5,725,780.
3 Canto v
.
BKcoin Management, LLC et al., Case No.: 22-cv-8858 (JPO) (S.D.N.Y. 2022).
4 BKcoin Management LLC et aI
.
v. BKcoin Multi-strategy Fund Ltd et aI., Case No. 2022-020760-CA-01 (Fla.
1 1th Circ. Ct. 2022).

V. CLAIM S FOR RELIEF
COUNT I
Violations of Section 17(a)(1) of the Securities Act
(as to Defendants)
55.   The Commission adopts by reference paragraphs l through 54 of this Complaint.
56.   Since at least 201 8, Defendants, in the offer or sale of securities by use of any means
or instruments of transportation or communication in interstate commerce or by use of the mails,
knowingly or recklessly, directly or indirectly employed devices, schemes, or artifices to defraud.
57.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section 17(a)(l) of the Securities Act (1 5 U.S.C. j
77q(a)(l)1.
COUNT 11
Violations of Section 17(a)(2) of the Securities Act
(as to Defendants)
58.   The Commission adopts by reference paragraphs 1 through 54 of this Complaint.
59.   Since at least 20l 8, Defendants, in the offer or sale of securities by use of any means
or instruments of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly, negligently obtained money or property by means of untrue statements of
material facts and omissions to state material facts necessary in order to make the statements made,
in the light of the circumstances under which they were made, not misleading.
60.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section 17(a)(2) of the
77q(a)(2)1.
Securities Act (15 U.S.C. j

COUNT III
Violations of Section 17(a)(3) of the Securities Act
(as to Defendants)
The Commission adopts by reference paragraphs l through 54 of this Complaint.
62.   Since at least 20l 8, Defendants, in the offer or sale of securities by use of any means
or instruments of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly, negligently ehgaged in transactions, practices, or courses of business which
have operated, are now operating or will operate as a fraud or deceit upon the purchasers.
63.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section l 7(a)(3) of the Securities Act (1 5 U.S.C. j
77q(a)(3)1.
COUNT IV
Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act
(as to Defendants)
The Commission adopts by reference paragraphs l through 54 of this Complaint.
65.   Since at least 201 8, Defendants, directly or indirectly, by the use of any means or
instrumentality of interstate commerce, or of the mails, knowingly or recklessly employed devices,
schemes or artitices to defraud in connection with the purchase or sale of any security.
66.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section l 0(b) of the Exchange Act gl 5 U.S.C. j 78j(b)1,
and Exchange Act Rule l0b-5(a) (17 C.F.R. j 240.1 0b-5(a)1.
COUNT V
Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act
(as to Defendants)
Tht Commission adopts by reference paragraphs 1 through 54 of this Complaint.
15

68.   Since at least 20l 8, Defendants, directly or indirectly, by the use of any means or
instrumentality of interstate commerce, or of the mails, knowingly or recklessly made untrue
statements of material facts or omitted to state material facts necessary in order to make the
statements made, in the light of the circumstances under which they were made, not misleading,
in connection with the purchase or sale of any security.
69.  By reason of the foregoing, Defendants violated and,unless enjoined, are
reasonably likely to continue to violate Section l0(b) of the Exchange Act (1 5 U.S.C. j 78j(b)1,
and Exchange Act Rule 10b-5(b) (17 C.F.R. j 240.l0b-5(b)1.
COUNT VI
Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act
(as to Defendants)
70.   The Commission adopts by reference paragraphs 1 through 54 of this Complaint.
Since at least 20l 8, Defendants, directly or indirectly, by use of any means or
instrumentality of interstate commerce, or of the mails, knowingly or recklessly engaged in acts,
practices, and courses of business which have operated, are now operating or will operate as a
fraud upon any person in connection with the purchase or sale of any security.
72.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section 10(b) of the Exchange Act (1 5 U.S.C. j 78j(b)),
and Exchange Act Rule 10b-5(c) (17 C.F.R. j 240.10b-5(c)1.
COUNT V1I
Violations of Section 206(1) of the Advisers Act
'
(as to Defendants)
The Commission adopts by reference paragraphs 1 through 54 of this Complaint.
16

74.   Since at least 20 l 8, Defendants, for compensation, engaged in the business of
directly advising the BKcoin Funds and others, and thus the potential and actual investors in the
BKcoin Funds, as to the value of securities or as to the advisability of investing in, purchasing, or
selling securities. Defendants were therefore tçinvestment advisers'' within the meaning of Section
202(a)(l 1) of the Advisers Act (1 5 U.S.C. j 80b-2(a)(1 1)1.
75.   Defendants, by use of the mails or any means or instrumentality of interstate
commerce, directly or indirectly knowingly or recklessly employed a device, scheme, or artifice
to defraud one or more clients or prospective clients.
76.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section 206(1) of the Advisers Act (15 U.S.C. j 80b-6(1)1.
COUNT VIII
Violations of Section 206(2) of the Advisers Act
(as to Defendants)
77.   The Commission adopts by reference paragraphs l through 54 and 74 of this
Complaint.
78.
of interstate commerce, directly or indirectly, negligently engaged in transactions, practices, or
courses of business which operated as a fraud or deceit upon one or more clients or prospective
clients.
79.  By reason of the foregoing, Defendants violated and, unless enjoined, are
reasonably Iikely to continue to violate Section 206(2) of the Advisers Act gl5 U.S.C. j 80b-6(2)J.
Since at least 201 8, Defendants, by use of the mails or any means or instrumentality
17

COUNT IX
Unjust Enrichment
(as to Relief Defendants)
80.   The Commission adopts by reference paragraphs 1 through 54 of this Complaint.
81 .  The Relief Defendants obtained funds as parq and in furtherance otl the securities
violations alleged above without a legitimate claim to those funds, and under those circumstances
it is not just, equitable or considerable for the Relief Defendants to retain the funds. The Relief
defendants were unjustly enriched.
82.   Relief Defendants should be ordered to disgorge the funds they received as a result
of Defendants' violations of the federal securities laws.
VI. RELIEF REOUESTED
W HEREFORE, the Commission respectfully requests the Court find the Defendants
comm itted the violations alleged, and:
1.
Perm anent Iniunction Aeainst Defendants
Issue a Permanent Injunction restraining and enjoining BKcoin and Kang from violating
Section 17(a) of the Securities Act (l5 U.S.C. j 77q(a)1, Section 10(b) of the Exchange Act (1 5
U.S.C. j 78j(b)1 and Rule l0b-5 thereunder gl7 C.F.R. j 240.10b-51, and Sections 206(1) and
20642) of the Advisers Act g15 U.S.C. jj 80b-6(l), 80b-6(2)1.
II.
Perm anent Conduct-Based Iniunction Aeainst Kane
lssue a Permanent Conduct-Based Injunction, restraining and enjoining Kang from,
directly or indirectly, including through any entity he owns or controls, participating in the
issuance, offer, purchase or sale of any securities, including crypto asset securities, except for
transactions in his own personal qccount.
18

111.
Asset Freeze. Accountine and Repatriation
lssue an order freezing assets of BKcoin, Kang and the Relief Defendants until further
notice of this Courq and requiring them to repatriate assets, and further ordering Defendant Kang
to provide the Court with a sworn accounting.
IV.
Appointment of Receiver
Appoint a receiver over BKcoin and the Relief Defendants.
V.
Records Preservation
Issue an order restraining and enjoining BKcoin and Kang and each of their directors,
officers, agents, servants, employees, attorneys, depositories, banks, and those persons in active
concert or participation with any one or more of them, and each of them, from, directly or
indirectly, destroying, mutilating, concealing, altering, disposing of, or otherwise rendering
illegible in any manner, any of the books, records, documents, correspondence, brochures,
manuals, papers, ledgers, accounts, statements, obligations, files and other property of or
pertaining to BKcoin and Kang, wherever located and in whatever form, electronic or otherwise,
that refer or relate to the acts or courses of conduct alleged in this Complaint, until further Order
of this Court.
VI.
Diseoreement and Preiudement Interest
lssue an Order directing BKcoin, Kang, and the Relief Defendants to disgorge all ill-gotten
gains, including prejudgment interest, resulting from the acts and/or courses of conduct alleged in
this Complaint.
19

VII.
Civil Penaltv
lssue an Order directing BKcoin and Kang to pay civil money penalties pursuant to
Section 20(d) of the Securities Act g15 U.S.C. j 77t(d)1, Section 21 (d)(3) of the Exchange Act
g15 U.S.C. j 78(d)(3)1, and Section 209(e) of the Advisers Act (15 U.S.C.j 80b-9(e)1.
111.
Oficer and Director Bar
lssue an Order barring Kang, pursuant to Section 20(e) of the Securities Act (1 5 U.S.C. j
77t(d)1, and Section 21(d)(2) of the Exchange Act gl 5 U.S.C. j 78u(d)(2)1, from serving as an
oftker or director of any company that has a class of securities registered with the Commission
pursuant to Section 12 of the Exchange Act g15 U.S.C. j 7811, or that is required to file reports
pursuant to Section 15(d) of the Exchange Act (15 U.S.C. j 78o(d)j.
IX.
Further Relief
Grant such other and further relief as may be necessary and appropriate.
X.
Retention of Jurisdiction
Further, the Commission respectfully requests the Court retain jurisdiction over this
action in order to implement and carry out the terms of a1l orders and decrees that it may enter, or
to entertain any suitable application or motion by the Commission for additional relief within the
jurisdiction of this Court.
XI.
Demand for Jurv Trial
The Commission hereby demands a trial by jury on any and all issues in this action so
triable.
20

February 23, 2023Respectfullv subm itted,
q:LLQU.x.
By:
Trial Counsel
Fla. Bar No. 22590
Direct Dial: (305) 982-6301
Email: [email protected]
Alexander H. Charap, Esq.
Senior Counsel
SDFL Special Bar No. A550271 l
Direct Dial: (305) 416-6228
Email: [email protected]
Jeffrey B. Goldberg, Esq.
Counsel
Fla. Bar No. 01 l 8689
Direct Dial (305) 982-6334
Email: [email protected]
Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COM M ISSION
801 Brickell Avenue, Suite 1950
M iami, Florida 33 l 31
Telephone: (305) 982-6300
Facsimile: (305) 536-4146

Sealed

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

SECURITIES AND EXCHANGE COM M ISSION,

Plaintiff,
V.

BKCOIN M ANAGEM ENT, LLC and
M IN W OO KANG a/k/a RKEVINM K ANG,

Defendants, and

BKCOIN CAPITAL, LP, :
BK OFFSHORE FUND, LTD.,
BKCOIN M ULTI-STRATEGY
M ASTER FUND, LTD.,
BKCOIN M ULTI-STRATEGY FUND, LP, :
BKCOIN M ULTI-STM TEGY FUND LTD., AND
BISON DIGITAL LLC,

Relief Defendants.

CASE NO.

FILED BY D.C.

FE8 23 2223

tNEGlarl1l'ls%%ey.C
S. D. OF FLA. - MlAMl

COM PLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiffsecurities and Exchange Commission (the ûdcommission'') alleges as follows:

1. SUM M ARY

1 . The Commission brings this action to prevent further fraud and m isappropriation

of investor money by BKcoin Management, LLC (1GBKCoin''), an exempt reporting investment

adviser, and one of its two managing members, Min Woo Kang a/k/a ûlKevin'' Kang (û1Kang'')

(collectively, EçDefendants'). From at least October 201 8 through September 2022 (the ltRelevant

Period''), BKcoin served as the investment adviser to the following five private funds formed to

generate profits primarily through investments in crypto assets:l Blkcoin Capital
, LP (the ddlwegacy

lCrypto assets are unique digital assets maintained on a cryptographically-secured blockchain. A blockchain or
distributed ledger is a peer-to-peer database spread across a network of computers that records aI1 transactions in
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 1 of 21



Fund'') BK Offshore Fund, Ltd. (the Ssoffshore Fund''), and three :lM ulti-strategy'' funds:

BKcoin Multi-strategy M aster Fund, Ltd., and its two feeder funds, BKcoin M ulti-strategy Fund,

LP and BKcoin Multi-strategy Fund Ltd. (the ddMulti-strategy Fundf') (all funds collectively, the

ûûBlkcoin Funds'). During that time, BKcoin also managed separately managed accounts

($$SMAs'') for certain clients.

During the Relevant Period, Defendants raised nearly $100 million from at least 55

investors, who invested in one or more of the five Blkcoin Funds (approximately $94.5 million),

or through an SMA managed by BKcoin (approximately $5 million). Defendants assured

investors and prospective investors in fund offering documents, investor agreements and other

communications that their funds would be used primarily to trade in crypto assets, and represented

that BKcoin would generate returns for investors in the BKcoin Funds or SM AS through specitic

investment strategies focusing on crypto assets. BKcoin also sent marketing presentations to at

least 1 8 investors or prospective investors claiming that BKcoin or one of the M ulti-strategy

Funds received a US opinion from a ûltop four auditor.''

These statements were false or materially misleading. ln fact, during the Relevant

Period, Defendants disregarded the BKcoin Funds' structures, commingled investor assets, and

used over $3.6 million to make Ponzi-like payments to fund investors. Relief defendant Bison

Digital LLC (llBison Digital''), a sixth crypto fund that had no investors except for Kang and the

other managing member of BKcoin, received $l2 million from BKcoin and the BKcoin Funds

for no apparent or legitimate reason. Kang also used BKcoin Funds' and SM A investors' funds

for personal use, misappropriating at least $371,000 of investor funds to pay for vacations, tickets

secure recording of transactions. Crypto tokens may be traded on crypto asset trading platforms in exchange for
other crypto assets or fiat currency (legal tender issued by a country).

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 2 of 21



to sporting events, trade crypto assets in his personal accounts, and to purchase an apartment in

New York City. Contrary to its claims of having an opinion from a tstop four auditor,'' neither

BKcoin nor any of the BKcoin Funds have received an opinion from any audit firm .

4. Kang attempted to conceal from investors Defendants' unauthorized use of funds,

by sending altered documents with intlated bank account balances to the third-party fund

administrator for the M ulti-strategy Funds. The administrator incorporated this false information

into the performance reports that were sent to investors.

By October 2022, however, Defendants' fraudulent scheme started to collapse.

BKcoin suspended Kang from employment and notified investors that it was suspending

redemption requests and capital withdrawals from the Blkcoin Funds. On October 28, 2022,

BKcoin filed an Emergency Petition for Appointment of Receiver in the Circuit Court for the

Eleventh Judicial Circuit in and for M iam i-Dade County Florida, seeking appointment of a

receiver over the M ulti-strategy Funds, which was granted and subsequently expanded to include

the Legacy Fund and the Offshore Fund.z Of the nearly $100 million that BKcoin raised from

investors, tens of millions of dollars are unaccounted for.

By engaging in the conduct set forth in this Complaint, Defendants violated Section

17(a) of the Securities Act of 1933 (ddsecurities Act'') (1 5 U.S.C. j 77q(a)1, Section l 0(b) of the

Securities Exchange Act of 1934 (ûdExchange Act'') gl 5 U.S.C. j 78j(b)1, Exchange Act Rule l0b-

5 (17 C.F.R. j 240.1 0b-51, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940

CEAdvisers Act'') (15 U.S.C. jj 80b-6(l), 80b-6(2)1.

Unless enjoined, Defendants will continue to violate the federal securities laws.

Among other relietl the Commission seeks permanent injunctions, disgorgement with prejudgment

2 See BKcoin Management LLC et al. v. BKcoin Multi-strategy Fund 1/J et al., Case No. 2022-020760-CA-0 1
(Fla. 1 1th Circ. Ct. 2022).

3

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 3 of 21



interest, and civil penalties against Defendants. The Commission also seeks an order against Kang'.

(i) enjoining Kang from participating in the offer or sale of securities, including crypto asset

securities, except for transactions in his own personal account; and (ii) imposing an officer and

director bar. Additionally, the Commission seeks disgorgement and prejudgment interest against

Relief Defendants. To protect investors and prevent further dissipation of assets, the Commission

also seeks asset freezes and other emergency relief against Defendants and Relief Defendants.

IL DEFENDANTS AND RELIEF DEFENDANTS

A. Defendants

8. Kang, age 33, resides in New York, New York. Kang co-founded BKcoin and is

one of its two managing members. In October 2022, BKcoin suspended Kang from employment.

Kang is a Chartered Financial Analyst, however, he is not registered with the Commission and

holds no securities licenses.

BKcoin is a Delaware limited liability company with its principal place of business

in M iami, Florida. Since November 2018, BKcoin has tiled reports with the Commission as an

exempt reporting adviser. In its most recent Form ADV filing with the Commission on M arch 29,

2022, BKcoin reported assets under management of approximately $70 million. During at least

the Relevant Period, BKcoin served as the investment adviser to the BKcoin Funds and SMAS

managed for individual and institutional investors.

B. Relief Defendants

l0. The Legacy Fund, formed in 201 8, is an unregistered fund organized as a Delaware

lim ited partnership. The Legacy Fund was formed primarily for the purpose of investing in crypto

assets.

4

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l 1 . The Offshore Fund, formed in 20l 9, is an unregistered fund organized under the

laws of the British Virgin Islands. The Offshore Fund was formed primarily for the purpose of

investing in crypto assets.

12. BKcoin Multi-strategy Master Fund Ltd. (isMaster Fund''), formed in 2022, is an

unregistered fund organized under the laws of the British Virgin lslands.It serves as the master

fund in a master-feeder structure, with BKcoin M ulti-strategy Fund LP and BKcoin M ulti-

Strategy Fund Ltd. as the feeder funds. The M ulti-strategy M aster Fund was formed for the

purpose of investing in crypto assets.

BKcoin M ulti-strategy Fund LP, formed in 2021 , is an unregistered fund

organized as a Delaware limited partnership, and is the domestic feeder fund for the Master Fund.

l4. BKcoin M ulti-strategy Fund Ltd., formed in 2022, is an unregistered fund

organized under the laws of the British Virgin Islands, and is the offshore feeder f'und for the

M aster Fund.

l 5. Bison Digital, LLC formed in 2019, is an unregistered fund organized as a

W yoming limited liability company. Kang co-founded Bison Digital, LLC and is one of its two

managing members. Bison Digital, LLC has no other investors.

111. JURISDICTION Ae  VENUE

16. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1),

22(a), and 22(c) of the Securities Act (15 U.S.C. jj 77t(b), 77t(d)(1), 77v(a), and 77v(c)1; Sections

2l(d), 27(a), and 27(b) of the Exchange Act gl 5 U.S.C. jj 78u(d), 78aa(a), and 78aa(b)1; and

Sections 209(d), 2 l4(a), and 2 l4(b) of the Advisers Act (15 U.S.C. jj 80b-9(d), 80b-14(a), and

80b-14(b)1.

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 5 of 21



l 7. The Court has personal jurisdiction over the Defendants and venue is proper in the

Southern District of Florida because: (a) many of Defendants' acts and transactions constituting

violations of the Securities Act, the Exchange Act, and the Advisers Act occurred in this District;

(b) BKcoin's principal place of business is in this District; and (c) some of the BKcoin Funds'

investors reside in this District.

l 8. ln connection with the conduct alleged in this Complaint, Defendants, directly and

indirectly, singly or in concert with others, made use of the means or instrumentalities of interstate

commerce, the means or instruments of transportation and communication in interstate commerce,

and the mails.

IV. FACTUAL ALLEGATIONS

A. Defendants Raised Nearly $100 M illion From Investors W ho Invested in
BKcoin Funds or Through SM AS

l9. Kang co-founded BKcoin in 20l 8, ostensibly for advising domestic and offshore

investment funds focused primarily on investing in crypto assets. Over the course of the next four

years, Kang and others formed the five BKcoin Funds, which Defendants offered to investors.

BKcoin serves as the investment adviser to the five BKcoin Funds. BKcoin also provided

investment advisory services to individual and institutional investors who opted to invest in crypto

assets through SMAS.

20. The Legacy Fund, formed by Kang and others in M arch 201 8, was the first private

fund for which BKcoin served as General Partner and investment adviser. According to its

website during the Relevant Period, the Legacy Fund invests primarily in crypto assets and its

investment strategy was to pursue a (smarket neutral strategy (thatj exploits price inefficiencies and

volatility within cryptocurrency markets and digital asset markets by applying proprietary

algorithms to our statistical arbitrage and long/short investment strategies.''

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 6 of 21



ln 2019, Kang and others formed the Offshore Fund, primarily for the purpose of

investing in crypto assets, and for which BKcoin served as the investment adviser. A Term Sheet

distributed to investors for the Offshore Fund states that its investment objective and strategy is to

ûûdeliver uncorrelated, absolute returns of 10-15% annually by using statistical arbitrage strategy''

as well as tGleverage'' as part of the investment strategy.

22. Kang and others formed the Multi-strategy Funds in 2021 and 2022, also for the

purpose of investing in crypto assets utilizing various trading strategies. According to a marketing

document provided to investors and prospective investors, the M ulti-strategy Funds were

ûsdesigned to give investors returns across a broad spectrum of strategies'' involving crypto assets.

23. During the Relevant Period, BKcoin raised approximately $100 million from more

than 55 investors who invested in the BKcoin Funds or through SMAS.Approximately $94.5

million of these funds wcre invested in the Legacy Fund ($67.87 million), the Multi-strategy

Funds ($l 8.7 million), and the Offshore Fund ($7.94 million). At least seven investors invested

approximately $5 million into SMAS managed by BKcoin.

24. During the Relevant Period, according to fund offering documents, BKcoin

charged a two percent and six percent yearly advisory fee for the investment advisory services it

provided to the Legacy Fund and Offshore Fund, respectively.

25. The interests sold by the Blkcoin Funds are securities within the meaning of

Section 2(a)(l) of the Securities Act, Section 3(a)(10) of the Exchange Act, and Section 202(a)(l 8)

of the Advisers Act (15 U.S.C. jj 77b(a)(1), 78c(a)(l0), and 80b-2(a)(l 8)1.

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 7 of 21



B. Defendants M ade M aterial M isrepresentations and Omissions to Investors in
Connection with the Offering of BKcoin Fund Investm ents and SM AS

(1) Defendants ' Misrepresentations and Omissions About the Use ofFunds

In BKcoin Funds' offering documents and limited partnership agreements with

investors, BKcoin represented to investors and prospective investors that it would use investor

funds for authorized pumoses, namely investments in crypto assets.

27. For example, the limited partnership agreements for the Legacy Fund and BKcoin

M ulti-strategy Fund LP, dated August 28, 2020 and M arch 3, 2022, respectively, authorize

BKcoin to, among other things, ttacquire, invest in, hold, pledge, manage, sell, transfer, operate,

or otherwise deal in or with the Portfolio Investments,'' a term defined to include crypto assets.

28. During the Relevant Period, BKcoin M ulti-strategy Fund Ltd. distributed to

prospective investors and investors a private placement memorandum dated M arch 3, 2022, that

stated its investment objective was to tlgenerate superior risk adjusted returns through a variety of

innovative alpha-generating investment strategies, which are, in each case, related to the digital

asset space.''

Similarly, the investment agreements with the SMA holders authorize BKcoin ttto

supervise and direct the investment and reinvestment of '

investment guidelines.

crypto aSSetS, subject to specific

30. Further, on September 7 and October 14, 2021, Kang represented to at least one

Legacy Fund investor that investor funds would be used to trade in crypto assets.

Based on these documents and statements, BKcoin and Kang led investors to

believe that BKcoin and the BKcoin Funds would use investors' money to trade in crypto assets

in order to return profits in which investors would share, and that Blkcoin would be entitled to

certain management fees.

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32. Contrary to these representations about the use of investor funds, Defendants

disregarded BKcoin Funds' structures, comingled millions of investors' funds among the BKcoin

Funds, and misappropriated investors' funds for unauthorized purposes. Kang misappropriated at

least $371 ,000 of investor funds to finance his Iavish lifestyle and trade in crypto assets for his

own benefit, as described in paragraphs 41 to 45 below. Furthermore, Defendants looted

substantially all investor deposits for the M ulti-strategy Funds, transferring millions to BKcoin's

and the Offshore Fund's bank accounts. Defendants then used at least $3.6 million of the funds

transferred from the M ulti-strategy Funds to make Ponzi-like distributions to investors in the

Legacy Fund and an SM A client, as described in paragraphs 46 to 49 below.

(2) BKcoin Falsely Stated to Investors That 1t, or one of the Multi-strategy
., îFunds, Had Received an Opinionfrom a GF/# Four ' Auditing Firm

BKcoin also materially misrepresented to certain investors that Blkcoin, or one of

the M ulti-strategy Funds, had received an opinion from a ûûtop four'' auditing tirm . ln marketing

presentations delivered to certain investors in the Multi-strategy Funds, BKcoin knowingly

represented that it was ûûone of the only firms with a US opinion from a top four auditor.''

34. For example, on M ay 23, 2022, an investment relations professional from BKfoin

emailed an investor and copied Kang with ttsome recent updates to our marketing materialsg.l''

Atlached to the email were two marketing documents that stated BKcoin or one of the M ulti-

Strategy Funds ttis also one of the only firms with a US opinion from a top four auditor . . .(.155

On M ay 24, 2022, an investment relations professional from BKcoin emailed a

prospective investor (and also copied Kang) two tûupdated marketing documents'' that stated

BKcoin or one of the M ulti-strategy Funds ttis also one of the only firms with a US opinion from

a top four auditor . . .(.155 A little over a month later on June 30, 2022, the prospective investor

deposited $1 .3 million in a Multi-strategy Funds account.

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 9 of 21



36. BKcoin emailed versions of one or both of these two ûdmarketing documents'' to at

least l 8 additional prospective investors of the M ulti-strategy Funds. Kang was copied on l l of

those emails and also sent several of those emails to prospective investors.

37. Contrary to this representation, at no time did BKcoin, or any of the BKcoin Funds

(including the Multi-strategy Funds), receive an opinion from a top four auditor, or any other

auditor.

38. All of the misrepresentations and omissions about the use of funds and the audit

opinion, individually and in the aggregate, are material. There is a substantial likelihood that a

reasonable investor in the BKcoin Funds would consider the misrepresented facts and omitted

information regarding how their money would be invested, the safety of those investments, and

whether BKcoin or the Multi-strategy Funds had received an audit opinion, to be important,

and/or the disclosure of the omitted facts or accurate information would alter the iitotal mix'' of

information available to investors.

Defendants' M isappropriation and M isuse of Investor Funds, and Kang's
Efforts to Conceal His M isconduct

39. During the Relevant Period, Kang had access to BKcoin's and the BKcoin Funds'

assets. Kang had access to and authority over domestic and, on information and beliet offshore

bank accounts for BKcoin and the BKcoin Funds, and over crypto asset trading accounts

maintained with at least nine crypto asset trading platforms. Kang had access to and authority over

certain bank and crypto asset trading accounts held by BKcoin or the BKcoin Funds.

40. Despite his obligation to investors as a fiduciary, and representations to investors

about the use of investor funds, during the Relevant Period, Kang repeatedly used investor funds

for unauthorized and undisclosed purposes. M oreover, Kang tried to conceal his misconduct by

altering information used to generate statements sent to investors.

10

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(1) Kang 's Misappropriation oflnvestor Fundsfor Personal Use

During the Relevant Period, Kang knowingly misappropriated at least $371,000 of

investor funds for his personal use.

42. During October 201 8, Kang transferred approximately $1 l ,000 of Legacy Fund

investor money to his personal account at a crypto asset trading platform .

43. In April 2021, Kang wired approximately $35,000 from a BKcoin bank accounty

to a third party in order to rent a vacation house in Montauk, New York. The $35,000 had been

sourced from two SM A clients' investments, which were originally deposited into a BKcoin bank

account.

44. From M ay 2021 through July 2022, Kang also knowingly misappropriated at least

$83,000 in investor funds to make payments to a credit card issued to the Legacy Fund. Kang

charged personal expenses to the Legacy Fund credit card, including travel to the Caribbean,

tickets to sporting events, and fine dining.

45. In May 2022, Kang purchased a $2.4 million apartment in New York City in the

name of the Offshore Fund, partially using investor funds. Specifically, on M arch 18, 2022, Kang

sent a wire transfer in the amount of $242,000, representing the down payment for the apartment,

from an Offshore Fund bank account to a boutique Iaw firm in New York that provides services

concerning the purchase, sale, and financing of real estate.

Case 1:23-cv-20719-RNS   Document 1   Entered on FLSD Docket 02/23/2023   Page 11 of 21



(2) Defendants Commingled Fund Assets and Used at Least $3.6 Million of
M ulti-strategy FundAssets to M ake Ponzia ike Payments to L egacy Fund and
SM A Investors

46. Defendants disregarded the BKcoin Funds' structure and diverted assets between

the separate funds. During the Relevant Period, Defendants made l 04 transfers worth over $122

million between bank accounts held by the BKcoin Funds and Bison Digital.

47. For example, between June and July 2022, Defendants diverted $15.6 million of

investor deposits for the M ulti-strategy Funds to Offshore Fund and BKcoin bank accounts. The

chart below illustrates the movement of investor dollars (shown in green), between the accounts.

$ l *34 (p00 Otber I;<
; oé yup:sI
i $395.:% Legacy FundI 

jl-pjztjutuz gywe-sior #);; i
Multi-strategy l . lMulti-strategy $ l 7.708.000 s 13.5r.t, ooo ofrskore Fund s 1 :47 t)oo I-qac) FaptlF

npdsFunds Investors l Actouwt Acceuat tA
ccellnts 1 l1 

t .I!..M.-. epMm Legacy Fundl '- IF liklii-jà ' 'otker spumes $ 3,163,(*0 , 07,26 2 Im.ezlor *2
af Fuds p Blœ

eial $2 oeo 0(k(p &z
,(*0.(*0 BKCOK MaRagementu--.z---?.-. yjasagemeut (46
.48/:0:2 .&-u.1 Cilent #1Account

48. As depicted in the chart, Defendants transferred $13.55 million of investor

deposits into the M ulti-strategy Funds to an Offshore Fund account. Defendants then transferred

$1 .65 million of those funds to a Legacy Fund account.

satisfy redemptions for two investors of the Legacy Fund.

Finally, Defendants used those funds to

49. Similarly, Kang transferred $2 million of investor deposits into the Multi-strategy

Funds to a BKcoin account, and then immediately paid those funds to an SMA investor.

(3) Kang Fals6ed Documents To Conceal the Unauthorized Transfers and
M isappropriation

50. Kang attempted to conceal his misappropriation and m isuse of investor funds by

knowingly providing documents with fictitious bank account balances to the third-party fund

administrator for the M ulti-strategy Funds.

12

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5 l . The documents that Kang provided to the third-party fund administrator overstated

the account balances in a bank account held by BKcoin M ulti-strategy Fund, LP by $9.4 million

in June 2022, $15.55 million in July 2022, and $15.56 million in August 2022.

52. The third-party fund adm inistrator incorporated the tictitious bank account

balances into the performance reports for June 2022, July 2022 and August 2022 that were

delivered to investors in the M ulti-strategy Funds. As a result, these performance reports

displayed materially misleading information about the performance of the M ulti-strategy Funds.

D. Defendants' Fraudulent Scheme Unravels

53. In October 2022, BKcoin suspended Kang from employment. BKcoin sent letters

to investors in the Blkcoin Funds, informing them that it was suspending the acceptance of

additional capital, the determination of Net Asset Value, and redemption payments or capital

account withdrawals.

54. On October 18, 2022, an investor in one of the SM AS managed by BKcoin filed

suit against BKcoin, Kang, and others alleging breach of fiduciary duty and aiding and abetting

breach of fiduciary duty.3 On October 28, 2022, BKcoin filed an Emergency Petition for

Appointment of Receiver in the Circuit Court of the Eleventh Judicial Circuit in and for M iami-

Dade County Florida, seeking appointment of a receiver over the M ulti-strategy Funds, which was

granted and subsequently expanded to include the Legacy Fund and the Offshore Fund.4 The

temporary receiver appointed in that action reported that the approximate value of all cash and

crypto assets recovered as of January 4, 2023 was only $5,725,780.

3 Canto v. BKcoin Management, LLC et al., Case No.: 22-cv-8858 (JPO) (S.D.N.Y. 2022).

4 BKcoin Management LLC et aI. v. BKcoin Multi-strategy Fund Ltd et aI., Case No. 2022-020760-CA-01 (Fla.
1 1th Circ. Ct. 2022).

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V. CLAIM S FOR RELIEF

COUNT I

Violations of Section 17(a)(1) of the Securities Act
(as to Defendants)

55. The Commission adopts by reference paragraphs l through 54 of this Complaint.

56. Since at least 201 8, Defendants, in the offer or sale of securities by use of any means

or instruments of transportation or communication in interstate commerce or by use of the mails,

knowingly or recklessly, directly or indirectly employed devices, schemes, or artifices to defraud.

57. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section 17(a)(l) of the Securities Act (1 5 U.S.C. j

77q(a)(l)1.

COUNT 11

Violations of Section 17(a)(2) of the Securities Act
(as to Defendants)

58. The Commission adopts by reference paragraphs 1 through 54 of this Complaint.

59. Since at least 20l 8, Defendants, in the offer or sale of securities by use of any means

or instruments of transportation or communication in interstate commerce or by use of the mails,

directly or indirectly, negligently obtained money or property by means of untrue statements of

material facts and omissions to state material facts necessary in order to make the statements made,

in the light of the circumstances under which they were made, not misleading.

60. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section 17(a)(2) of the

77q(a)(2)1.

Securities Act (15 U.S.C. j

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COUNT III

Violations of Section 17(a)(3) of the Securities Act
(as to Defendants)

The Commission adopts by reference paragraphs l through 54 of this Complaint.

62. Since at least 20l 8, Defendants, in the offer or sale of securities by use of any means

or instruments of transportation or communication in interstate commerce or by use of the mails,

directly or indirectly, negligently ehgaged in transactions, practices, or courses of business which

have operated, are now operating or will operate as a fraud or deceit upon the purchasers.

63. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section l 7(a)(3) of the Securities Act (1 5 U.S.C. j

77q(a)(3)1.

COUNT IV

Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act
(as to Defendants)

The Commission adopts by reference paragraphs l through 54 of this Complaint.

65. Since at least 201 8, Defendants, directly or indirectly, by the use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly employed devices,

schemes or artitices to defraud in connection with the purchase or sale of any security.

66. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section l 0(b) of the Exchange Act gl 5 U.S.C. j 78j(b)1,

and Exchange Act Rule l0b-5(a) (17 C.F.R. j 240.1 0b-5(a)1.

COUNT V

Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act
(as to Defendants)

Tht Commission adopts by reference paragraphs 1 through 54 of this Complaint.

15

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68. Since at least 20l 8, Defendants, directly or indirectly, by the use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly made untrue

statements of material facts or omitted to state material facts necessary in order to make the

statements made, in the light of the circumstances under which they were made, not misleading,

in connection with the purchase or sale of any security.

69. By reason of the foregoing, Defendants violated and,unless enjoined, are

reasonably likely to continue to violate Section l0(b) of the Exchange Act (1 5 U.S.C. j 78j(b)1,

and Exchange Act Rule 10b-5(b) (17 C.F.R. j 240.l0b-5(b)1.

COUNT VI

Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act
(as to Defendants)

70. The Commission adopts by reference paragraphs 1 through 54 of this Complaint.

Since at least 20l 8, Defendants, directly or indirectly, by use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly engaged in acts,

practices, and courses of business which have operated, are now operating or will operate as a

fraud upon any person in connection with the purchase or sale of any security.

72. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section 10(b) of the Exchange Act (1 5 U.S.C. j 78j(b)),

and Exchange Act Rule 10b-5(c) (17 C.F.R. j 240.10b-5(c)1.

COUNT V1I

Violations of Section 206(1) of the Advisers Act
' 

(as to Defendants)

The Commission adopts by reference paragraphs 1 through 54 of this Complaint.

16

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74. Since at least 20 l 8, Defendants, for compensation, engaged in the business of

directly advising the BKcoin Funds and others, and thus the potential and actual investors in the

BKcoin Funds, as to the value of securities or as to the advisability of investing in, purchasing, or

selling securities. Defendants were therefore tçinvestment advisers'' within the meaning of Section

202(a)(l 1) of the Advisers Act (1 5 U.S.C. j 80b-2(a)(1 1)1.

75. Defendants, by use of the mails or any means or instrumentality of interstate

commerce, directly or indirectly knowingly or recklessly employed a device, scheme, or artifice

to defraud one or more clients or prospective clients.

76. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably likely to continue to violate Section 206(1) of the Advisers Act (15 U.S.C. j 80b-6(1)1.

COUNT VIII

Violations of Section 206(2) of the Advisers Act
(as to Defendants)

77. The Commission adopts by reference paragraphs l through 54 and 74 of this

Complaint.

78.

of interstate commerce, directly or indirectly, negligently engaged in transactions, practices, or

courses of business which operated as a fraud or deceit upon one or more clients or prospective

clients.

79. By reason of the foregoing, Defendants violated and, unless enjoined, are

reasonably Iikely to continue to violate Section 206(2) of the Advisers Act gl5 U.S.C. j 80b-6(2)J.

Since at least 201 8, Defendants, by use of the mails or any means or instrumentality

17

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COUNT IX

Unjust Enrichment
(as to Relief Defendants)

80. The Commission adopts by reference paragraphs 1 through 54 of this Complaint.

81 . The Relief Defendants obtained funds as parq and in furtherance otl the securities

violations alleged above without a legitimate claim to those funds, and under those circumstances

it is not just, equitable or considerable for the Relief Defendants to retain the funds. The Relief

defendants were unjustly enriched.

82. Relief Defendants should be ordered to disgorge the funds they received as a result

of Defendants' violations of the federal securities laws.

VI. RELIEF REOUESTED

W HEREFORE, the Commission respectfully requests the Court find the Defendants

comm itted the violations alleged, and:

1.
Perm anent Iniunction Aeainst Defendants

Issue a Permanent Injunction restraining and enjoining BKcoin and Kang from violating

Section 17(a) of the Securities Act (l5 U.S.C. j 77q(a)1, Section 10(b) of the Exchange Act (1 5

U.S.C. j 78j(b)1 and Rule l0b-5 thereunder gl7 C.F.R. j 240.10b-51, and Sections 206(1) and

20642) of the Advisers Act g15 U.S.C. jj 80b-6(l), 80b-6(2)1.

II.
Perm anent Conduct-Based Iniunction Aeainst Kane

lssue a Permanent Conduct-Based Injunction, restraining and enjoining Kang from,

directly or indirectly, including through any entity he owns or controls, participating in the

issuance, offer, purchase or sale of any securities, including crypto asset securities, except for

transactions in his own personal qccount.

18

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111.
Asset Freeze. Accountine and Repatriation

lssue an order freezing assets of BKcoin, Kang and the Relief Defendants until further

notice of this Courq and requiring them to repatriate assets, and further ordering Defendant Kang

to provide the Court with a sworn accounting.

IV.
Appointment of Receiver

Appoint a receiver over BKcoin and the Relief Defendants.

V.
Records Preservation

Issue an order restraining and enjoining BKcoin and Kang and each of their directors,

officers, agents, servants, employees, attorneys, depositories, banks, and those persons in active

concert or participation with any one or more of them, and each of them, from, directly or

indirectly, destroying, mutilating, concealing, altering, disposing of, or otherwise rendering

illegible in any manner, any of the books, records, documents, correspondence, brochures,

manuals, papers, ledgers, accounts, statements, obligations, files and other property of or

pertaining to BKcoin and Kang, wherever located and in whatever form, electronic or otherwise,

that refer or relate to the acts or courses of conduct alleged in this Complaint, until further Order

of this Court.

VI.
Diseoreement and Preiudement Interest

lssue an Order directing BKcoin, Kang, and the Relief Defendants to disgorge all ill-gotten

gains, including prejudgment interest, resulting from the acts and/or courses of conduct alleged in

this Complaint.

19

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VII.
Civil Penaltv

lssue an Order directing BKcoin and Kang to pay civil money penalties pursuant to

Section 20(d) of the Securities Act g15 U.S.C. j 77t(d)1, Section 21 (d)(3) of the Exchange Act

g15 U.S.C. j 78(d)(3)1, and Section 209(e) of the Advisers Act (15 U.S.C.j 80b-9(e)1.

111.
Oficer and Director Bar

lssue an Order barring Kang, pursuant to Section 20(e) of the Securities Act (1 5 U.S.C. j

77t(d)1, and Section 21(d)(2) of the Exchange Act gl 5 U.S.C. j 78u(d)(2)1, from serving as an

oftker or director of any company that has a class of securities registered with the Commission

pursuant to Section 12 of the Exchange Act g15 U.S.C. j 7811, or that is required to file reports

pursuant to Section 15(d) of the Exchange Act (15 U.S.C. j 78o(d)j.

IX.
Further Relief

Grant such other and further relief as may be necessary and appropriate.

X.
Retention of Jurisdiction

Further, the Commission respectfully requests the Court retain jurisdiction over this

action in order to implement and carry out the terms of a1l orders and decrees that it may enter, or

to entertain any suitable application or motion by the Commission for additional relief within the

jurisdiction of this Court.

XI.
Demand for Jurv Trial

The Commission hereby demands a trial by jury on any and all issues in this action so

triable.

20

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February 23, 2023 Respectfullv subm itted,
q:LLQU.x.

By:
Trial Counsel
Fla. Bar No. 22590
Direct Dial: (305) 982-6301
Email: [email protected]

Alexander H. Charap, Esq.
Senior Counsel
SDFL Special Bar No. A550271 l
Direct Dial: (305) 416-6228
Email: [email protected]

Jeffrey B. Goldberg, Esq.
Counsel
Fla. Bar No. 01 l 8689
Direct Dial (305) 982-6334
Email: [email protected]

Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COM M ISSION
801 Brickell Avenue, Suite 1950
M iami, Florida 33 l 31
Telephone: (305) 982-6300
Facsimile: (305) 536-4146

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