SEC v. Eric Zhu, No. 3:25-cv-00054, Middle District of Louisiana (Jan. 16, 2025) — Complaint

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

CASE NO.:

SECURITIES AND EXCHANGE
COMMISSION,

 Plaintiff,

v.

ERIC ZHU,

 Defendant.
___________________________________/

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

I.
SUMMARY

Plaintiff Securities and Exchange Commission (the “Commission”) alleges as follows:
1. From approximately June 2021 through at least September 2021, Defendant Eric
Zhu engaged in a fraudulent scheme to deceive investors in the “Game Coin” token (“GME”), a
crypto asset that was offered and sold as a security, predominantly to investors residing in or
around Baton Rouge, Louisiana.
2. Individual 1 and Individual 2, who are both in the landscaping business by trade,
formed a business to develop a website-based “Game Coin” marketplace that would allow
amateur athletes to create and sell digital trading cards of themselves.  Individual 1 and
Individual 2 contemplated the creation of a new crypto asset called “GME” that would serve as
the medium of exchange for purchases of digital trading cards available for sale on the
marketplace.  Individual 1 and Individual 2 aggressively promoted GME on social media and
promised investors that they would build a marketplace where investors could use GME to buy

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digital trading cards of amateur athletes.  Zhu, an experienced blockchain engineer, was hired to
perform coding work for the offer and sale of GME to the public.
3. From at least June 2021 through at least November 2021, Individual 1 and
Individual 2 offered and sold GME to investors through a crypto asset trading platform known as
PancakeSwap.  PancakeSwap enables investors to trade crypto assets.  PancakeSwap does so by
facilitating the creation and operation of so-called “liquidity pools,” which are pools of crypto
asset pairs that may be exchanged for one another.  For example, a liquidity pool may hold
Crypto Asset A and Crypto Asset B, and an investor may withdraw Crypto Asset A from the
pool in exchange for depositing Crypto Asset B into the pool.
4. In June 2021, Individual 1 and Individual 2 launched the public sale of GME by
establishing a PancakeSwap liquidity pool (the “GME Liquidity Pool” or the “Pool”).  The GME
Liquidity Pool enables any investor to buy and sell GME.  As the name suggests, liquidity pools
require liquidity (i.e., deposited crypto asset pairs available for trading).  Individual 1 and
Individual 2 arranged for GME and the crypto asset known as Binance Coin “BNB”
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 to be
deposited into the GME Liquidity Pool.  These deposits of GME and BNB served as the initial
liquidity for the GME Liquidity Pool.
5. Investors are able to interact with the GME Liquidity Pool – for example, buying
GME and depositing BNB, or selling GME and withdrawing BNB.  At any given time, the value
of GME in the GME Liquidity Pool is determined by the ratio of GME and BNB in the Pool.  As

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 Generally speaking, PancakeSwap supports trading in a specific subset of crypto assets called “BEP-20 tokens.”
BNB itself is not a BEP-20 token, and therefore, investors generally cannot use BNB to buy and sell crypto assets
through PancakeSwap.  The applicable crypto asset pair in the GME Liquidity Pool is GME and “wBNB,” which is
a PancakeSwap-compatible crypto asset that is similar to BNB, but technologically distinct.  For simplicity, we refer
to wBNB as “BNB.” Investors can acquire BNB through crypto asset trading platforms that support trading in BNB.

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investors purchase GME through the GME Liquidity Pool using BNB, the supply of GME within
the Pool decreases and the value of GME increases.
6. A person that deposits a crypto asset token pair (i.e., liquidity) into the Liquidity
Pool receives “liquidity provider” tokens (“LP tokens”).  Absent safeguards, these LP tokens
allow the holder of the tokens to withdraw a pro rata share of the liquidity deposited into the
Pool.  Such liquidity pools create certain risks for investors, including the risk that the holder of a
significant number of LP tokens will, without warning, withdraw a large portion of the token pair
(here, GME and BNB) from the liquidity pool.  The LP token holder may then sell (i.e., deposit)
large volumes of one of the crypto assets into the Pool, thus significantly diminishing the value
of that crypto asset.  A significant withdrawal of liquidity, and corresponding sale of a crypto
asset, is described by some in the crypto asset industry as a “rug pull” because the seller, in
essence, pulls the rug out from under the investors who purchased crypto assets through the
liquidity pool.
7. Cognizant of this risk, Individual 1 and Individual 2 represented in publicly-
available social media posts that they implemented safeguards.  In particular, they assured
investors that “liquidity” was “locked,” which in the parlance of the crypto asset industry,
conveys that LP tokens cannot be used by the issuers or other insiders to withdraw liquidity in
rug pull-like fashion.
8. Zhu engaged in a course of conduct that deceived GME investors about the
vulnerability of the GME offering to rug pulls and about the value of GME.  Zhu knew, or was
reckless in not knowing, that investors were told that liquidity was locked.  Zhu also knew, or
was reckless in not knowing, that GME investors expected the creators of GME to take steps to
safeguard LP tokens and prevent them from being used in a rug pull.

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9. Yet, as part of the mechanics of the offer and sale of GME, certain LP tokens
accrued to an address Zhu alone controlled.  And, unbeknownst to anyone, including Individual
1 and Individual 2, Zhu kept those LP tokens unlocked and used them to withdraw GME and
BNB from the Liquidity Pool.  Zhu then sold the withdrawn GME into the Liquidity Pool and
misappropriated crypto assets worth approximately $553,000.  Zhu’s sales were indicative of a
possible rug pull and caused an approximate 12% decline in the price of GME.
10. Through his conduct, Zhu violated the antifraud provisions of the federal
securities laws.
II.
VIOLATIONS

11. By engaging in the conduct set forth in this Complaint, Zhu violated Sections
17(a)(1) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1)
and 77q(a)(3)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15
U.S.C. § 78j(b)], and Exchange Act Rules 10b-5(a) and 10b-5(c) thereunder [17 C.F.R. §§
240.10b-5(a) and 240.10b-5(c)].
12. Unless enjoined, Defendant will continue to violate the federal securities laws.
Among other relief, the Commission seeks a permanent injunction, disgorgement of ill-gotten
gains with prejudgment interest, and a civil monetary penalty.  The Commission further seeks
any other relief that may be necessary and appropriate.

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III.
JURISDICTION AND VENUE

13. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d) and 77v(a)], and Sections 21(d) and 27(a)
of the Exchange Act [15 U.S.C. §§ 78u(d) and 78aa(a)].
14. The Court has personal jurisdiction over the Defendant and venue is proper in the
Middle District of Louisiana because a substantial part of the events or omissions giving rise to
the violations of the Securities Act and the Exchange Act occurred in this District, including the
marketing of the GME token and the purchases of GME by, and offers and sales to, investors.
15. In connection with the conduct alleged in this Complaint, Defendant, 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, or the mails.
IV.
DEFENDANT AND OTHER RELEVANT ENTITY AND PERSONS

A. Defendant
16. Zhu, age 26, lives in New York, New York, and is a freelance blockchain
engineer.  Zhu was hired to provide technical assistance in connection with the offer and sale of
GME to the public.
B. Relevant Entity and Persons
17. Game Coin, LLC is a Louisiana Limited Liability Company formed in August
2021, with its principal place of business in Baton Rouge, Louisiana.  Individual 1 and Individual
2 formed Game Coin, LLC, for the purpose of offering and selling GME and developing a
website-based marketplace that would allow amateur athletes to create digital trading cards.

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18. Individual 1, age 44, lives in Baton Rouge, Louisiana, and is the sole proprietor
of a commercial and residential landscaping company.  Individual 1 funded the creation of the
marketing website for GME and for the digital trading card marketplace and paid for the BNB
that formed part of the initial liquidity for the GME Liquidity Pool.  Individual 1 also promoted
the offer and sale of GME.
19. Individual 2, age 42, lives in Denham Springs, Louisiana, and works primarily in
the landscaping business and also serves as a youth baseball coach.  Individual 2 conceived of
the digital trading card marketplace and the corresponding offer and sale of GME.  Individual 2
also promoted the offer and sale of GME.
20. Individual 3, age 28, lives in Stirling, New Jersey, and at least as of May 2021,
held himself out to Individual 1 and Individual 2 as having experience with the marketing and
issuance of crypto assets.  He is also the Chief Executive Officer of a New Jersey corporation,
which, among other things, purports to operate gas stations in New Jersey and New York.
V.
BACKGROUND ON CRYPTO ASSETS

A. Crypto Assets

21. The term “crypto asset” generally refers to an asset issued or transferred using
distributed ledger or blockchain technology, including assets sometimes referred to as
“cryptocurrencies,” “digital assets,” “virtual currencies,” “digital coins,” and “digital tokens.”
22. A blockchain or distributed ledger is a peer-to-peer database spread across a
network of computers that records all transactions in theoretically unchangeable, digitally
recorded data packages.  The system relies on cryptographic techniques for secure recording of
transactions.

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23. Blockchains typically employ a consensus mechanism to “validate” transactions,
which, among other things, aim to achieve agreement on a data value or on the state of the
ledger.
24. A public address is a unique string of numbers and letters that enables a crypto
asset holder to send, receive and otherwise access their crypto assets.  Each public address has a
private key, which is analogous to a password and confers on the holder the ability to control the
crypto assets stored at the public address.
25. Crypto asset trading platforms generally offer a variety of services relating to
crypto assets, including trading services.
26. Certain crypto asset trading platforms, such as PancakeSwap–the platform where
investors purchased and sold GME–enable trading in crypto assets by facilitating the creation
and operation of liquidity pools, as alleged in this Complaint.
27. A “smart contract” is computer code deployed on a blockchain.  For example, a
smart contract may automatically assess a fee on transfers of particular crypto assets and deposit
that fee into predetermined blockchain addresses.  A smart contract can govern the issuance and
distribution of tokens on a blockchain, and typically those who deploy such smart contracts can
control them through administrative access rights.
B. The Offer and Sale of Crypto Assets
28. Crypto assets are often offered or sold by issuers or promoters, including, but not
limited to, through so-called “initial exchange offerings,” in which the initial distributions of the
crypto asset by the issuer or promoter are effectuated through trading platforms.

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29. The issuers or promoters offering or selling the crypto assets often publicly
release a “whitepaper” or other marketing materials, which typically describe a project to which
the asset relates, the terms of the offering, and rights associated with the asset.
30. Issuers frequently continue to sell the crypto assets after the initial offer and sale,
including by, directly or indirectly, selling them on crypto asset trading platforms.
VI.
FACTUAL ALLEGATIONS

A. GME and the “Game Coin” Digital Trading Card Marketplace

31. In April 2021, Individual 2 conceived the vision for a website-based digital
marketplace that would enable amateur athletes to create and sell digital trading cards of
themselves.  Individual 2 conceived that athletes would use the proceeds of the sales to finance
the costs associated with amateur sports, including sporting goods and travel to team events.
32. Individual 2 hoped to promote the marketplace, in part, by capitalizing on the
popularity of crypto assets.  He contemplated that the digital trading cards available for sale
would only be purchased using a specific crypto asset, and not by using fiat currency, such as
U.S. dollars, or other crypto assets.  Individual 2 later named the crypto asset GME.
33. Based on his prior experience as a retail investor buying and selling crypto assets,
Individual 2 believed that the best way to distribute GME to the investing public would be by
selling GME to investors through an initial exchange offering on PancakeSwap.
34. In or around late April 2021, Individual 2 discussed his idea for the marketplace
and for the GME crypto asset with Individual 1.  Soon thereafter, Individual 1 agreed to finance
marketing efforts to solicit GME investors and the development of the digital trading card
marketplace, and to provide the initial liquidity for the GME Liquidity Pool.

9
35. Individual 2 contemplated a smart contract function that would assess a 10% fee
on each GME transaction, including on GME purchases made through the GME Liquidity Pool
and on GME transfers between investors.  For example, if an investor purchased the equivalent
of $100 in GME through PancakeSwap or transferred the equivalent of $100 in GME to another
investor, the smart contract would automatically assess a fee equivalent to $10 in GME on the
transaction.
36. Individual 2 further contemplated that the smart contract would have a function
that automatically transfers the proceeds from the 10% fee in accordance with a preset formula:
4% to a crypto asset address earmarked for charity; 2% to a crypto asset address earmarked for
marketing expenses; 2% distributed back to GME investors; and 2% for additional “liquidity” –
i.e., for deposit into the GME Liquidity Pool.
B. GME Marketing Efforts
37. From the time when GME was first available for sale on June 22, 2021, through at
least November 2021, Individual 1 and Individual 2 aggressively marketed GME to solicit
investors and increase the value of GME.
38. In or around June 30, 2021, Individual 1 and Individual 2 drafted and published
the “Game Coin” whitepaper on their website, www.thegamecoin.net.  The whitepaper explained
that “[a]s an investor, you are investing into a vision of being able to provide every athlete in the
world the opportunity to connect, compete and compare their abilities on one platform while at
the same time being able to donate to a charity that will supply the less fortunate athletes the
proper apparel, equipment and training tools necessary to succeed.”   The whitepaper described a
“future platform/website that will be similar to Facebook, yet more dynamic and complex,” that
would track athlete statistics and have athlete rankings.

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39. Individual 1 and Individual 2 promoted GME through social media and online
chat rooms.  For example, on August 11, 2021, Individual 1 posted in the “Game Coin” chat
room on Telegram that “[i]f all of the Game Coin get bought, everyone in this community will
never have to worry about  ever again ”
40. Individual 1 and Individual 2 retained a local Baton Rouge advertising firm to
assist with marketing GME.  On August 17, 2021, Individual 1 represented to investors that the
advertising firm would “launch a national digital marketing campaign” for GME that “will be to
a targeted audience with a goal of reaching 1,000,000-5,000,000 clicks a month.”
41. Individual 1 and Individual 2 also touted the safeguards intended to prevent rug
pulls.  On June 23, 2021, the “Game Coin” social media Telegram account posted the phrase
“Liquidity Locked,” and in so doing, conveyed that LP tokens were locked and could not be used
by issuers or other insiders to perpetrate a rug pull.

42.   That same day, Individual 2 posted the phrase “Liquidity Locked” on his
Facebook account regarding the GME offer and sale.

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43. Starting in or around June 29, 2021, the “Game Coin” Instagram account page
also touted “Liquidity Locked.”

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C. The Minting of GME
44. Notwithstanding these marketing efforts, neither Individual 1 nor Individual 2 had
a background in technology.  Neither of them knew how to code a smart contract or build a
website.  Accordingly, in advance of the GME offer and sale, Individual 1 and Individual 2 hired
a third person, Individual 3, to assist with the public distribution of GME and the development of
the marketing website for the digital trading card marketplace.
45. In discussions with Individual 1 and Individual 2, Individual 3 held himself out as
an expert in blockchain technology and coding, with a team of developers behind him.
Individual 3 agreed to help code the GME smart contract, arrange for the offer and sale of GME
through PancakeSwap and build a marketing website for GME and the digital trading card
marketplace, all in exchange for $15,000 and 3.5% of the future supply of GME.
46. Despite his representations, Individual 3 also did not have the technical skills
required to code a smart contract or conduct a crypto asset offer and sale through PancakeSwap.
Accordingly, Individual 3 contacted Zhu, who did have the requisite skills.  Zhu agreed to
provide technical expertise in exchange for a promise of a percentage of the future supply of
GME.  Individual 3 directed Zhu to code the smart contract, mint (i.e., create) GME tokens, and
provide other technical assistance to establish the GME Liquidity Pool.
47. Zhu did as he was instructed.  On or around June 22, 2021, Zhu coded the GME
smart contract.  Consistent with Individual 2’s contemplated design, Zhu included in the smart
contract a function that assessed a 10% GME fee on each GME transaction.
48. On or around the same day, Zhu minted 100 billion GME.  Of the 100 billion
tokens, Zhu immediately destroyed (i.e., “burned”) 25 billion, in accordance with instructions
from Individual 1 and Individual 2.  “Burning” crypto assets is a process that permanently

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decreases the total supply of a crypto asset and thereby typically increases the value of that
crypto asset.
49. Of the remaining 75 billion GME tokens, Zhu transferred 20 billion to addresses
controlled by Individual 1, Individual 2, and Individual 3, and to an address that Individual 1 and
Individual 2 designated to be used for GME marketing purposes.  The purpose of these transfers,
respectively, was to ensure that Individuals 1, 2 and 3 would profit if the value of GME
increased and to fund GME marketing expenses.
50. Zhu deposited the remaining 55 billion GME tokens into the GME Liquidity Pool.
Zhu also deposited into the Pool 100 BNB provided by Individual 1, which was at the time worth
the equivalent of approximately $28,196.  Together, the 55 billion GME tokens and the 100 BNB
constituted the initial liquidity for the GME Liquidity Pool.
51. Because he deposited the GME and BNB into the GME Liquidity Pool, Zhu
received LP tokens corresponding to these deposits of initial liquidity.  Zhu transferred the LP
tokens from his address to an address controlled by Individual 3 and instructed Individual 3 on
how to “lock” those LP tokens.  The process of “locking” these LP tokens prevented anyone
from using them to withdraw GME and BNB from the GME Liquidity Pool.
D. The GME Smart Contract and Zhu’s Set of Unlocked LP Tokens
52. On or around June 22, 2021, GME was available for purchase and sale by any
investor through the PancakeSwap GME Liquidity Pool.
53. Coincident with the inception of the sale of GME, Zhu deployed the newly-
created GME smart contract.  As alleged above, the smart contract incorporated a function that
charged a 10% fee on each GME transaction.  The smart contract function automatically
deposited the proceeds from the fee into various addresses, including into an address designated

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for charitable causes, an address designated for GME marketing, and into the GME Liquidity
Pool.  The automatic deposits of liquidity into the GME Liquidity Pool created a continuously
increasing set of unlocked LP tokens, which accrued in an address that was, at the time, under
Zhu’s exclusive control.  Between June 2021 and September 16, 2021, that address accrued 8.16
unlocked LP tokens.
54. Zhu knew, or was reckless in not knowing, that GME investors expected the
creators of GME to take steps to safeguard these LP tokens and prevent them from being used in
a rug pull.  He also knew, or was reckless in not knowing, that investors were told that liquidity
was locked.  However, Zhu kept his set of 8.16 LP tokens unlocked.
55. By controlling these unlocked LP tokens, Zhu had the ability to withdraw
liquidity at will from the GME Liquidity Pool, then diminish the value of GME by selling the
withdrawn GME for his own benefit, thereby destroying investor confidence in GME (i.e.,
engage in a rug pull).
E. Zhu Siphons Investor Funds from the Liquidity Pool
56. In or around August 2021, Individual 1 and Individual 2 hired a third party to
assist with technological support for the offer and sale of GME.  The third party identified
vulnerabilities arising from certain LP tokens being concentrated in a single address that
Individual 1 and Individual 2 did not control.
57. By September 16, 2021, concerned in part about these vulnerabilities, Individual 1
and Individual 2 sought to obtain the private key to this address, which was at that time, under
Zhu’s exclusive control.  As alleged above, this address contained 8.16 unlocked LP tokens that
could be used to withdraw GME and BNB from the GME Liquidity Pool.

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58. On September 17, 2021, Zhu agreed to share with Individual 1 and Individual 2
the private key to the address under his control.  However, before sharing the private key, Zhu
transferred the 8.16 unlocked LP tokens to a separate address also under his control.
59. On September 17, 2021 and September 18, 2021, in a series of transactions
through PancakeSwap, Zhu used the unlocked LP tokens to withdraw GME and BNB from the
GME Liquidity Pool.  On the same day, Zhu sold (i.e., deposited) the GME back into the GME
Liquidity Pool and bought (i.e., withdrew) BNB.  At the time of those sales, GME was trading in
the range of approximately $.0039 to $.0045, which represented a premium of at least 24,000%
over the value of GME on August 14, 2021, and a premium of at least 78,000% over the value of
GME on June 23, 2021.
60. Zhu’s sales of GME caused an approximate 12% decline in the price of GME, and
caused panic and suspicion among GME investors on social media that GME had been the target
of a rug pull which, in fact, it had.
61. On September 18, 2021, Zhu transferred some of the BNB he withdrew and the
proceeds of his sales of GME to an address that he controlled and that was hosted by an offshore
crypto asset trading platform.  Together, at the time, they were worth approximately $553,000.
62. Individual 1 and Individual 2 rightfully suspected that the GME Liquidity Pool
had been the target of a rug pull.  Individual 1 and Individual 2 eventually stopped promoting
GME and instead decided to use a different crypto asset as the medium of exchange for the
promised digital trading card marketplace.  The marketplace was eventually launched in
November 2024.

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VII.
CLAIMS FOR RELIEF

COUNT I
Violations of Section 17(a)(1) of the Securities Act
63. The Commission repeats and realleges Paragraphs 1 through 62 of this Complaint
as if incorporated herein.
64. From approximately June 2021 through at least September 2021, Defendant, 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.
65. By reason of the foregoing, Defendant violated and, unless enjoined, is reasonably
likely to continue to violate Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)].
COUNT II
Violations of Section 17(a)(3) of the Securities Act
66. The Commission repeats and realleges Paragraphs 1 through 62 of this Complaint
as if incorporated herein.
67. From approximately June 2021 through at least September 2021, Defendant, in
the offer or sale of securities by use any means or instruments of transportation or
communication in interstate commerce or by use of the mails, directly or indirectly, engaged in
transactions, practices and courses of business which have operated, are now operating or will
operate as a fraud or deceit upon the purchasers of such securities.
68. By reason of the foregoing, Defendant violated, and, unless enjoined, is
reasonably likely to continue to violate Section 17(a)(3) of the Securities Act [15 U.S.C. §
77q(a)(3)].

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COUNT III

Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act
69. The Commission repeats and realleges Paragraphs 1 through 62 of its Complaint
as if incorporated herein.
70. From approximately June 2021 through at least September 2021, Defendant,
directly and indirectly, by use of any means or instrumentality of interstate commerce, or of the
mails, knowingly or recklessly employed any device, scheme or artifice to defraud in connection
with the purchase or sale of a security.
71. By reason of the foregoing, Defendant violated, and, unless enjoined, is
reasonably likely to continue to violate Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(a)
thereunder of the Exchange Act  [17 C.F.R. § 240.10b-5(a)].
COUNT IV
Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act
72. The Commission repeats and realleges Paragraphs 1 through 62 of its Complaint
as if incorporated herein.
73. From approximately June 2021 through at least September 2021, the Defendant,
directly and 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 operated
or would have operated as a fraud or deceit upon any person in connection with the purchase or
sale of a security.
74. By reason of the foregoing, Defendant violated, and, unless enjoined, is
reasonably likely to continue to violate Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(c)
thereunder of the Exchange Act [17 C.F.R. § 240.10b-5(c)].

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VIII.
RELIEF REQUESTED

WHEREFORE,  the Commission  respectfully  requests  the  Court  find  the  Defendant
committed the violations alleged, and:
I.
Permanent Injunction

Issue a Permanent Injunction enjoining Defendant, his officers, agents, servants,
employees, attorneys, and all persons in active concert or participation with them and each of
them, from violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a)
and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)], and Sections 17(a)(1) and (3) of the
Securities Act [15 U.S.C. § 77q(a)(1) and (3)].
II.
Disgorgement

Issue an Order directing Defendant to disgorge all ill-gotten gains, including prejudgment
interest, resulting from the acts or courses of conduct alleged in this Complaint.
III.
Penalties

Issue an Order directing Defendant to pay civil money penalties pursuant to Section 20(d)
of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)].
IV.
Further Relief

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

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V.
Retention of Jurisdiction

Further, the Commission respectfully requests that the Court retain jurisdiction over this
action and over Defendant in order to implement and carry out the terms of all orders and
decrees that may hereby be entered, or to entertain any suitable application or motion by the
Commission for additional relief within the jurisdiction of this Court.
VI.
Demand for Jury Trial

The  Commission  hereby  demands  a  trial  by  jury  on  any  and  all  issues  in  this  action  so
triable.
Dated:  January 16, 2025   Respectfully submitted
UNITED STATES OF AMERICA, by

RONALD C. GATHE, JR.
      UNITED STATES ATTORNEY

      /s/ Davis Rhorer, Jr.
Davis Rhorer, Jr., LBN 37519
Assistant United States Attorney
777 Florida Street, Suite 208
Baton Rouge, Louisiana 70801
Telephone: (225) 389-0443
Facsimile:  (225) 389-0685
E-mail: [email protected]

       /s/ Russell Koonin
       Russell Koonin
      Senior Trial Counsel
Fla. Bar No. 474479
Direct Dial: (305) 982-6390
      Email: [email protected]

/s/ Alexander H. Charap
Senior Counsel
Fla. Bar No. 1035908
Direct Dial: (305) 416-6228
Email: [email protected]

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/s/Sarah B. Belter-Pylant
Counsel
Fla Bar No. 27485
Direct Dial: (305) 416-6246
Email: [email protected]

Attorneys for Plaintiff
 Securities and Exchange Commission
 801 Brickell Avenue, Suite 1950
Miami, FL 33131
Telephone: (305) 982-6300
Facsimile: (305) 536-4154

UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF LOUISIANA 

 

CASE NO.:  

 

SECURITIES AND EXCHANGE  

COMMISSION, 

 

 Plaintiff, 

 

v. 

 

ERIC ZHU, 

 

 Defendant. 

___________________________________/ 

 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF 

 

I. 

SUMMARY 

 

Plaintiff Securities and Exchange Commission (the “Commission”) alleges as follows: 

1. From approximately June 2021 through at least September 2021, Defendant Eric 

Zhu engaged in a fraudulent scheme to deceive investors in the “Game Coin” token (“GME”), a 

crypto asset that was offered and sold as a security, predominantly to investors residing in or 

around Baton Rouge, Louisiana.   

2. Individual 1 and Individual 2, who are both in the landscaping business by trade, 

formed a business to develop a website-based “Game Coin” marketplace that would allow 

amateur athletes to create and sell digital trading cards of themselves.  Individual 1 and 

Individual 2 contemplated the creation of a new crypto asset called “GME” that would serve as 

the medium of exchange for purchases of digital trading cards available for sale on the 

marketplace.  Individual 1 and Individual 2 aggressively promoted GME on social media and 

promised investors that they would build a marketplace where investors could use GME to buy 

Case 3:25-cv-00054-JWD-RLB       Document 1      01/16/25     Page 1 of 20



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digital trading cards of amateur athletes.  Zhu, an experienced blockchain engineer, was hired to 

perform coding work for the offer and sale of GME to the public. 

3. From at least June 2021 through at least November 2021, Individual 1 and 

Individual 2 offered and sold GME to investors through a crypto asset trading platform known as 

PancakeSwap.  PancakeSwap enables investors to trade crypto assets.  PancakeSwap does so by 

facilitating the creation and operation of so-called “liquidity pools,” which are pools of crypto 

asset pairs that may be exchanged for one another.  For example, a liquidity pool may hold 

Crypto Asset A and Crypto Asset B, and an investor may withdraw Crypto Asset A from the 

pool in exchange for depositing Crypto Asset B into the pool.    

4. In June 2021, Individual 1 and Individual 2 launched the public sale of GME by 

establishing a PancakeSwap liquidity pool (the “GME Liquidity Pool” or the “Pool”).  The GME 

Liquidity Pool enables any investor to buy and sell GME.  As the name suggests, liquidity pools 

require liquidity (i.e., deposited crypto asset pairs available for trading).  Individual 1 and 

Individual 2 arranged for GME and the crypto asset known as Binance Coin “BNB”1 to be 

deposited into the GME Liquidity Pool.  These deposits of GME and BNB served as the initial 

liquidity for the GME Liquidity Pool.   

5. Investors are able to interact with the GME Liquidity Pool – for example, buying 

GME and depositing BNB, or selling GME and withdrawing BNB.  At any given time, the value 

of GME in the GME Liquidity Pool is determined by the ratio of GME and BNB in the Pool.  As 

 
1 Generally speaking, PancakeSwap supports trading in a specific subset of crypto assets called “BEP-20 tokens.”  

BNB itself is not a BEP-20 token, and therefore, investors generally cannot use BNB to buy and sell crypto assets 

through PancakeSwap.  The applicable crypto asset pair in the GME Liquidity Pool is GME and “wBNB,” which is 

a PancakeSwap-compatible crypto asset that is similar to BNB, but technologically distinct.  For simplicity, we refer 

to wBNB as “BNB.” Investors can acquire BNB through crypto asset trading platforms that support trading in BNB. 

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investors purchase GME through the GME Liquidity Pool using BNB, the supply of GME within 

the Pool decreases and the value of GME increases.  

6. A person that deposits a crypto asset token pair (i.e., liquidity) into the Liquidity 

Pool receives “liquidity provider” tokens (“LP tokens”).  Absent safeguards, these LP tokens 

allow the holder of the tokens to withdraw a pro rata share of the liquidity deposited into the 

Pool.  Such liquidity pools create certain risks for investors, including the risk that the holder of a 

significant number of LP tokens will, without warning, withdraw a large portion of the token pair 

(here, GME and BNB) from the liquidity pool.  The LP token holder may then sell (i.e., deposit) 

large volumes of one of the crypto assets into the Pool, thus significantly diminishing the value 

of that crypto asset.  A significant withdrawal of liquidity, and corresponding sale of a crypto 

asset, is described by some in the crypto asset industry as a “rug pull” because the seller, in 

essence, pulls the rug out from under the investors who purchased crypto assets through the 

liquidity pool. 

7. Cognizant of this risk, Individual 1 and Individual 2 represented in publicly-

available social media posts that they implemented safeguards.  In particular, they assured 

investors that “liquidity” was “locked,” which in the parlance of the crypto asset industry, 

conveys that LP tokens cannot be used by the issuers or other insiders to withdraw liquidity in 

rug pull-like fashion. 

8. Zhu engaged in a course of conduct that deceived GME investors about the 

vulnerability of the GME offering to rug pulls and about the value of GME.  Zhu knew, or was 

reckless in not knowing, that investors were told that liquidity was locked.  Zhu also knew, or 

was reckless in not knowing, that GME investors expected the creators of GME to take steps to 

safeguard LP tokens and prevent them from being used in a rug pull.   

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4 

9. Yet, as part of the mechanics of the offer and sale of GME, certain LP tokens 

accrued to an address Zhu alone controlled.  And, unbeknownst to anyone, including Individual 

1 and Individual 2, Zhu kept those LP tokens unlocked and used them to withdraw GME and 

BNB from the Liquidity Pool.  Zhu then sold the withdrawn GME into the Liquidity Pool and 

misappropriated crypto assets worth approximately $553,000.  Zhu’s sales were indicative of a 

possible rug pull and caused an approximate 12% decline in the price of GME.  

10. Through his conduct, Zhu violated the antifraud provisions of the federal 

securities laws.   

II.  

VIOLATIONS 

 

11. By engaging in the conduct set forth in this Complaint, Zhu violated Sections 

17(a)(1) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1) 

and 77q(a)(3)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 

U.S.C. § 78j(b)], and Exchange Act Rules 10b-5(a) and 10b-5(c) thereunder [17 C.F.R. §§ 

240.10b-5(a) and 240.10b-5(c)].  

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

Among other relief, the Commission seeks a permanent injunction, disgorgement of ill-gotten 

gains with prejudgment interest, and a civil monetary penalty.  The Commission further seeks 

any other relief that may be necessary and appropriate.   

  

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III. 

JURISDICTION AND VENUE 

 

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

22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d) and 77v(a)], and Sections 21(d) and 27(a) 

of the Exchange Act [15 U.S.C. §§ 78u(d) and 78aa(a)]. 

14. The Court has personal jurisdiction over the Defendant and venue is proper in the 

Middle District of Louisiana because a substantial part of the events or omissions giving rise to 

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

marketing of the GME token and the purchases of GME by, and offers and sales to, investors. 

15. In connection with the conduct alleged in this Complaint, Defendant, 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, or the mails. 

IV. 

DEFENDANT AND OTHER RELEVANT ENTITY AND PERSONS 

 

A. Defendant 

16. Zhu, age 26, lives in New York, New York, and is a freelance blockchain 

engineer.  Zhu was hired to provide technical assistance in connection with the offer and sale of 

GME to the public. 

B. Relevant Entity and Persons 

17. Game Coin, LLC is a Louisiana Limited Liability Company formed in August 

2021, with its principal place of business in Baton Rouge, Louisiana.  Individual 1 and Individual 

2 formed Game Coin, LLC, for the purpose of offering and selling GME and developing a 

website-based marketplace that would allow amateur athletes to create digital trading cards.  

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18. Individual 1, age 44, lives in Baton Rouge, Louisiana, and is the sole proprietor 

of a commercial and residential landscaping company.  Individual 1 funded the creation of the 

marketing website for GME and for the digital trading card marketplace and paid for the BNB 

that formed part of the initial liquidity for the GME Liquidity Pool.  Individual 1 also promoted 

the offer and sale of GME. 

19. Individual 2, age 42, lives in Denham Springs, Louisiana, and works primarily in 

the landscaping business and also serves as a youth baseball coach.  Individual 2 conceived of 

the digital trading card marketplace and the corresponding offer and sale of GME.  Individual 2 

also promoted the offer and sale of GME. 

20. Individual 3, age 28, lives in Stirling, New Jersey, and at least as of May 2021, 

held himself out to Individual 1 and Individual 2 as having experience with the marketing and 

issuance of crypto assets.  He is also the Chief Executive Officer of a New Jersey corporation, 

which, among other things, purports to operate gas stations in New Jersey and New York. 

V. 

BACKGROUND ON CRYPTO ASSETS 

 

A. Crypto Assets 

 

21. The term “crypto asset” generally refers to an asset issued or transferred using 

distributed ledger or blockchain technology, including assets sometimes referred to as 

“cryptocurrencies,” “digital assets,” “virtual currencies,” “digital coins,” and “digital tokens.” 

22. A blockchain or distributed ledger is a peer-to-peer database spread across a 

network of computers that records all transactions in theoretically unchangeable, digitally 

recorded data packages.  The system relies on cryptographic techniques for secure recording of 

transactions.  

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23. Blockchains typically employ a consensus mechanism to “validate” transactions, 

which, among other things, aim to achieve agreement on a data value or on the state of the 

ledger.   

24. A public address is a unique string of numbers and letters that enables a crypto 

asset holder to send, receive and otherwise access their crypto assets.  Each public address has a 

private key, which is analogous to a password and confers on the holder the ability to control the 

crypto assets stored at the public address.   

25. Crypto asset trading platforms generally offer a variety of services relating to 

crypto assets, including trading services. 

26. Certain crypto asset trading platforms, such as PancakeSwap–the platform where 

investors purchased and sold GME–enable trading in crypto assets by facilitating the creation 

and operation of liquidity pools, as alleged in this Complaint. 

27. A “smart contract” is computer code deployed on a blockchain.  For example, a 

smart contract may automatically assess a fee on transfers of particular crypto assets and deposit 

that fee into predetermined blockchain addresses.  A smart contract can govern the issuance and 

distribution of tokens on a blockchain, and typically those who deploy such smart contracts can 

control them through administrative access rights.   

B. The Offer and Sale of Crypto Assets 

28. Crypto assets are often offered or sold by issuers or promoters, including, but not 

limited to, through so-called “initial exchange offerings,” in which the initial distributions of the 

crypto asset by the issuer or promoter are effectuated through trading platforms.  

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29. The issuers or promoters offering or selling the crypto assets often publicly 

release a “whitepaper” or other marketing materials, which typically describe a project to which 

the asset relates, the terms of the offering, and rights associated with the asset.   

30. Issuers frequently continue to sell the crypto assets after the initial offer and sale, 

including by, directly or indirectly, selling them on crypto asset trading platforms. 

VI. 

FACTUAL ALLEGATIONS 

 

A. GME and the “Game Coin” Digital Trading Card Marketplace 

 

31. In April 2021, Individual 2 conceived the vision for a website-based digital 

marketplace that would enable amateur athletes to create and sell digital trading cards of 

themselves.  Individual 2 conceived that athletes would use the proceeds of the sales to finance 

the costs associated with amateur sports, including sporting goods and travel to team events.   

32. Individual 2 hoped to promote the marketplace, in part, by capitalizing on the 

popularity of crypto assets.  He contemplated that the digital trading cards available for sale 

would only be purchased using a specific crypto asset, and not by using fiat currency, such as 

U.S. dollars, or other crypto assets.  Individual 2 later named the crypto asset GME. 

33. Based on his prior experience as a retail investor buying and selling crypto assets, 

Individual 2 believed that the best way to distribute GME to the investing public would be by 

selling GME to investors through an initial exchange offering on PancakeSwap. 

34. In or around late April 2021, Individual 2 discussed his idea for the marketplace 

and for the GME crypto asset with Individual 1.  Soon thereafter, Individual 1 agreed to finance 

marketing efforts to solicit GME investors and the development of the digital trading card 

marketplace, and to provide the initial liquidity for the GME Liquidity Pool.  

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35. Individual 2 contemplated a smart contract function that would assess a 10% fee 

on each GME transaction, including on GME purchases made through the GME Liquidity Pool 

and on GME transfers between investors.  For example, if an investor purchased the equivalent 

of $100 in GME through PancakeSwap or transferred the equivalent of $100 in GME to another 

investor, the smart contract would automatically assess a fee equivalent to $10 in GME on the 

transaction.   

36. Individual 2 further contemplated that the smart contract would have a function 

that automatically transfers the proceeds from the 10% fee in accordance with a preset formula: 

4% to a crypto asset address earmarked for charity; 2% to a crypto asset address earmarked for 

marketing expenses; 2% distributed back to GME investors; and 2% for additional “liquidity” –

i.e., for deposit into the GME Liquidity Pool. 

B. GME Marketing Efforts 

37. From the time when GME was first available for sale on June 22, 2021, through at 

least November 2021, Individual 1 and Individual 2 aggressively marketed GME to solicit 

investors and increase the value of GME.  

38. In or around June 30, 2021, Individual 1 and Individual 2 drafted and published 

the “Game Coin” whitepaper on their website, www.thegamecoin.net.  The whitepaper explained 

that “[a]s an investor, you are investing into a vision of being able to provide every athlete in the 

world the opportunity to connect, compete and compare their abilities on one platform while at 

the same time being able to donate to a charity that will supply the less fortunate athletes the 

proper apparel, equipment and training tools necessary to succeed.”   The whitepaper described a 

“future platform/website that will be similar to Facebook, yet more dynamic and complex,” that 

would track athlete statistics and have athlete rankings. 

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39. Individual 1 and Individual 2 promoted GME through social media and online 

chat rooms.  For example, on August 11, 2021, Individual 1 posted in the “Game Coin” chat 

room on Telegram that “[i]f all of the Game Coin get bought, everyone in this community will 

never have to worry about  ever again ” 

40. Individual 1 and Individual 2 retained a local Baton Rouge advertising firm to 

assist with marketing GME.  On August 17, 2021, Individual 1 represented to investors that the 

advertising firm would “launch a national digital marketing campaign” for GME that “will be to 

a targeted audience with a goal of reaching 1,000,000-5,000,000 clicks a month.” 

41. Individual 1 and Individual 2 also touted the safeguards intended to prevent rug 

pulls.  On June 23, 2021, the “Game Coin” social media Telegram account posted the phrase 

“Liquidity Locked,” and in so doing, conveyed that LP tokens were locked and could not be used 

by issuers or other insiders to perpetrate a rug pull. 

 

42.   That same day, Individual 2 posted the phrase “Liquidity Locked” on his 

Facebook account regarding the GME offer and sale. 

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11 

 
 

43. Starting in or around June 29, 2021, the “Game Coin” Instagram account page 

also touted “Liquidity Locked.” 

 

 

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C. The Minting of GME  

44. Notwithstanding these marketing efforts, neither Individual 1 nor Individual 2 had 

a background in technology.  Neither of them knew how to code a smart contract or build a 

website.  Accordingly, in advance of the GME offer and sale, Individual 1 and Individual 2 hired 

a third person, Individual 3, to assist with the public distribution of GME and the development of 

the marketing website for the digital trading card marketplace.   

45. In discussions with Individual 1 and Individual 2, Individual 3 held himself out as 

an expert in blockchain technology and coding, with a team of developers behind him.  

Individual 3 agreed to help code the GME smart contract, arrange for the offer and sale of GME 

through PancakeSwap and build a marketing website for GME and the digital trading card 

marketplace, all in exchange for $15,000 and 3.5% of the future supply of GME. 

46. Despite his representations, Individual 3 also did not have the technical skills 

required to code a smart contract or conduct a crypto asset offer and sale through PancakeSwap.  

Accordingly, Individual 3 contacted Zhu, who did have the requisite skills.  Zhu agreed to 

provide technical expertise in exchange for a promise of a percentage of the future supply of 

GME.  Individual 3 directed Zhu to code the smart contract, mint (i.e., create) GME tokens, and 

provide other technical assistance to establish the GME Liquidity Pool.   

47. Zhu did as he was instructed.  On or around June 22, 2021, Zhu coded the GME 

smart contract.  Consistent with Individual 2’s contemplated design, Zhu included in the smart 

contract a function that assessed a 10% GME fee on each GME transaction.   

48. On or around the same day, Zhu minted 100 billion GME.  Of the 100 billion 

tokens, Zhu immediately destroyed (i.e., “burned”) 25 billion, in accordance with instructions 

from Individual 1 and Individual 2.  “Burning” crypto assets is a process that permanently 

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decreases the total supply of a crypto asset and thereby typically increases the value of that 

crypto asset. 

49. Of the remaining 75 billion GME tokens, Zhu transferred 20 billion to addresses 

controlled by Individual 1, Individual 2, and Individual 3, and to an address that Individual 1 and 

Individual 2 designated to be used for GME marketing purposes.  The purpose of these transfers, 

respectively, was to ensure that Individuals 1, 2 and 3 would profit if the value of GME 

increased and to fund GME marketing expenses.  

50. Zhu deposited the remaining 55 billion GME tokens into the GME Liquidity Pool.  

Zhu also deposited into the Pool 100 BNB provided by Individual 1, which was at the time worth 

the equivalent of approximately $28,196.  Together, the 55 billion GME tokens and the 100 BNB 

constituted the initial liquidity for the GME Liquidity Pool. 

51. Because he deposited the GME and BNB into the GME Liquidity Pool, Zhu 

received LP tokens corresponding to these deposits of initial liquidity.  Zhu transferred the LP 

tokens from his address to an address controlled by Individual 3 and instructed Individual 3 on 

how to “lock” those LP tokens.  The process of “locking” these LP tokens prevented anyone 

from using them to withdraw GME and BNB from the GME Liquidity Pool. 

D. The GME Smart Contract and Zhu’s Set of Unlocked LP Tokens 

52. On or around June 22, 2021, GME was available for purchase and sale by any 

investor through the PancakeSwap GME Liquidity Pool.  

53. Coincident with the inception of the sale of GME, Zhu deployed the newly-

created GME smart contract.  As alleged above, the smart contract incorporated a function that 

charged a 10% fee on each GME transaction.  The smart contract function automatically 

deposited the proceeds from the fee into various addresses, including into an address designated 

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for charitable causes, an address designated for GME marketing, and into the GME Liquidity 

Pool.  The automatic deposits of liquidity into the GME Liquidity Pool created a continuously 

increasing set of unlocked LP tokens, which accrued in an address that was, at the time, under 

Zhu’s exclusive control.  Between June 2021 and September 16, 2021, that address accrued 8.16 

unlocked LP tokens. 

54. Zhu knew, or was reckless in not knowing, that GME investors expected the 

creators of GME to take steps to safeguard these LP tokens and prevent them from being used in 

a rug pull.  He also knew, or was reckless in not knowing, that investors were told that liquidity 

was locked.  However, Zhu kept his set of 8.16 LP tokens unlocked. 

55. By controlling these unlocked LP tokens, Zhu had the ability to withdraw 

liquidity at will from the GME Liquidity Pool, then diminish the value of GME by selling the 

withdrawn GME for his own benefit, thereby destroying investor confidence in GME (i.e., 

engage in a rug pull).   

E. Zhu Siphons Investor Funds from the Liquidity Pool 

56. In or around August 2021, Individual 1 and Individual 2 hired a third party to 

assist with technological support for the offer and sale of GME.  The third party identified 

vulnerabilities arising from certain LP tokens being concentrated in a single address that 

Individual 1 and Individual 2 did not control.  

57. By September 16, 2021, concerned in part about these vulnerabilities, Individual 1 

and Individual 2 sought to obtain the private key to this address, which was at that time, under 

Zhu’s exclusive control.  As alleged above, this address contained 8.16 unlocked LP tokens that 

could be used to withdraw GME and BNB from the GME Liquidity Pool. 

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15 

58. On September 17, 2021, Zhu agreed to share with Individual 1 and Individual 2 

the private key to the address under his control.  However, before sharing the private key, Zhu 

transferred the 8.16 unlocked LP tokens to a separate address also under his control.    

59. On September 17, 2021 and September 18, 2021, in a series of transactions 

through PancakeSwap, Zhu used the unlocked LP tokens to withdraw GME and BNB from the 

GME Liquidity Pool.  On the same day, Zhu sold (i.e., deposited) the GME back into the GME 

Liquidity Pool and bought (i.e., withdrew) BNB.  At the time of those sales, GME was trading in 

the range of approximately $.0039 to $.0045, which represented a premium of at least 24,000% 

over the value of GME on August 14, 2021, and a premium of at least 78,000% over the value of 

GME on June 23, 2021. 

60. Zhu’s sales of GME caused an approximate 12% decline in the price of GME, and 

caused panic and suspicion among GME investors on social media that GME had been the target 

of a rug pull which, in fact, it had.  

61. On September 18, 2021, Zhu transferred some of the BNB he withdrew and the 

proceeds of his sales of GME to an address that he controlled and that was hosted by an offshore 

crypto asset trading platform.  Together, at the time, they were worth approximately $553,000. 

62. Individual 1 and Individual 2 rightfully suspected that the GME Liquidity Pool 

had been the target of a rug pull.  Individual 1 and Individual 2 eventually stopped promoting 

GME and instead decided to use a different crypto asset as the medium of exchange for the 

promised digital trading card marketplace.  The marketplace was eventually launched in 

November 2024.  

 

 

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16 

VII.  

CLAIMS FOR RELIEF 

 

COUNT I 

Violations of Section 17(a)(1) of the Securities Act 

63. The Commission repeats and realleges Paragraphs 1 through 62 of this Complaint 

as if incorporated herein. 

64. From approximately June 2021 through at least September 2021, Defendant, 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.   

65. By reason of the foregoing, Defendant violated and, unless enjoined, is reasonably 

likely to continue to violate Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 

COUNT II 

Violations of Section 17(a)(3) of the Securities Act 

66. The Commission repeats and realleges Paragraphs 1 through 62 of this Complaint 

as if incorporated herein. 

67. From approximately June 2021 through at least September 2021, Defendant, in 

the offer or sale of securities by use any means or instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, engaged in 

transactions, practices and courses of business which have operated, are now operating or will 

operate as a fraud or deceit upon the purchasers of such securities.   

68. By reason of the foregoing, Defendant violated, and, unless enjoined, is 

reasonably likely to continue to violate Section 17(a)(3) of the Securities Act [15 U.S.C. § 

77q(a)(3)]. 

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17 

COUNT III 

 

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

69. The Commission repeats and realleges Paragraphs 1 through 62 of its Complaint 

as if incorporated herein. 

70. From approximately June 2021 through at least September 2021, Defendant, 

directly and indirectly, by use of any means or instrumentality of interstate commerce, or of the 

mails, knowingly or recklessly employed any device, scheme or artifice to defraud in connection 

with the purchase or sale of a security. 

71. By reason of the foregoing, Defendant violated, and, unless enjoined, is 

reasonably likely to continue to violate Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(a) 

thereunder of the Exchange Act  [17 C.F.R. § 240.10b-5(a)]. 

COUNT IV 

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

72. The Commission repeats and realleges Paragraphs 1 through 62 of its Complaint 

as if incorporated herein. 

73. From approximately June 2021 through at least September 2021, the Defendant, 

directly and 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 operated 

or would have operated as a fraud or deceit upon any person in connection with the purchase or 

sale of a security. 

74. By reason of the foregoing, Defendant violated, and, unless enjoined, is 

reasonably likely to continue to violate Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(c) 

thereunder of the Exchange Act [17 C.F.R. § 240.10b-5(c)]. 

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18 

VIII.  

RELIEF REQUESTED 

 

WHEREFORE, the Commission respectfully requests the Court find the Defendant 

committed the violations alleged, and: 

I. 

Permanent Injunction 

 

Issue a Permanent Injunction enjoining Defendant, his officers, agents, servants, 

employees, attorneys, and all persons in active concert or participation with them and each of 

them, from violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) 

and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)], and Sections 17(a)(1) and (3) of the 

Securities Act [15 U.S.C. § 77q(a)(1) and (3)]. 

II. 

Disgorgement 

 

Issue an Order directing Defendant to disgorge all ill-gotten gains, including prejudgment 

interest, resulting from the acts or courses of conduct alleged in this Complaint. 

III. 

Penalties 

 

Issue an Order directing Defendant to pay civil money penalties pursuant to Section 20(d) 

of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)]. 

IV. 

Further Relief 

 

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

  

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19 

V. 

Retention of Jurisdiction 

 

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

action and over Defendant in order to implement and carry out the terms of all orders and 

decrees that may hereby be entered, or to entertain any suitable application or motion by the 

Commission for additional relief within the jurisdiction of this Court. 

VI. 

Demand for Jury Trial 

 

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

triable. 

Dated:  January 16, 2025   Respectfully submitted 

UNITED STATES OF AMERICA, by 

 

RONALD C. GATHE, JR. 

      UNITED STATES ATTORNEY 

 

      /s/ Davis Rhorer, Jr. 

Davis Rhorer, Jr., LBN 37519  

Assistant United States Attorney  

777 Florida Street, Suite 208  

Baton Rouge, Louisiana 70801  

Telephone: (225) 389-0443  

Facsimile:  (225) 389-0685  

E-mail: [email protected] 

        

       /s/ Russell Koonin 

       Russell Koonin 

      Senior Trial Counsel 

Fla. Bar No. 474479 

Direct Dial: (305) 982-6390 

      Email: [email protected]    

   

/s/ Alexander H. Charap  

Senior Counsel  

Fla. Bar No. 1035908  

Direct Dial: (305) 416-6228 

Email: [email protected] 

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20 

 

/s/Sarah B. Belter-Pylant 

Counsel 

Fla Bar No. 27485 

Direct Dial: (305) 416-6246 

Email: [email protected] 

 

Attorneys for Plaintiff     

 Securities and Exchange Commission  

 801 Brickell Avenue, Suite 1950 

Miami, FL 33131 

Telephone: (305) 982-6300 

Facsimile: (305) 536-4154 

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