SEC alleges fake hedge fund forged seals to steal $130M

The SEC says two entities used fabricated government credentials and bogus AI trading signals to swindle tens of thousands of investors.

In a complaint filed October 29 in the US District Court for the Northern District of California, the Securities and Exchange Commission alleges BG Wealth Sharing Ltd and DSJ Exchange PTY Ltd ran what the agency calls a "fraudulent investment confidence scheme" between October 2025 and June 2026, collecting more than $130 million from investors across the US and abroad.

BG Wealth marketed itself as "the world's largest hedge fund" and an SEC-licensed advisor, the filing says. It promised returns of "at least 60%" per month, told investors they could "double [their] principal within 40 days," and assured them of "zero risk." The supposed engine was a set of proprietary AI-generated crypto trading signals - referred to in the complaint as Super Intelligence, per Executive Order 14434 - with a claimed accuracy of 99.6%.

None of it was real, the SEC alleges. DSJ Exchange's trading platform displayed "fabricated transactions, profits, and account balances," according to the complaint. The defendants "misappropriated the vast majority of investor assets" and returned no more than $25 million to wallet addresses likely associated with investors in what the filing calls "Ponzi-like payments" - using new money to pay earlier investors and keep the operation running.

The compliance story is where this gets pointed for the advisory industry.

The SEC alleges the defendants exploited the agency's own public filing systems to build a false front. BG Wealth filed a Form ADV with the SEC claiming exempt reporting advisor status, the complaint states. DSJ Exchange filed a Form D announcing a purported $100 million exempt securities offering. Neither entity was registered with the SEC, according to the filing.

The defendants then created "fabricated registration certificates bearing the SEC's seal" and pointed investors to the SEC's own IAPD and EDGAR websites to verify those filings - as though filing paperwork meant the government had blessed their operation, the complaint alleges. It did not. A Form ADV filed by an exempt reporting advisor and a Form D notice are not SEC licenses, and they do not mean the SEC has approved the filer or its investments, as the complaint makes clear.

BG Wealth's Form ADV "contained numerous false and misleading statements," the SEC alleges. The filing identifies a purported auditor called Indicator Global that "does not appear in any public registry of federal or state accounting firms" and instead appeared to have held itself out as an investment advisory business. BG Wealth's listed principal office was a PostNet virtual mailbox, its US phone number was disconnected, and mail sent to addresses in its filings "was returned as undeliverable," the complaint states.

The scheme ran on a multi-level marketing engine, the SEC says. Investors could unlock additional trading signals, bonuses, commissions, and "transaction volume dividends" by recruiting new participants through a 12-level system. One promoter in the Northern District of California rose to Level 7 with roughly 5,000 downstream investors and opened an office in Concord, California, the filing states.

Between March and mid-June 2026, the defendants collected over $130 million from more than 223,000 blockchain addresses across more than 40 US states, multiple territories, and overseas, according to the complaint.

The operation kept going even after at least seven foreign securities regulators issued public warnings and state authorities in Alaska, Hawaii, Oklahoma, Texas, Utah, Washington, and Wisconsin issued cease-and-desist orders, the filing says. After the FBI seized a BG Wealth website domain in April 2026, the purported founder blamed a "Chinese hacker" and told investors to stay calm, the complaint alleges.

The purported founder of BG Wealth is described in the complaint as a person whose age and residency are unknown. The SEC states that, upon information and belief, the name used is "an assumed identity." The individual has never been registered with the SEC in any capacity, according to the filing. The complaint identifies the defendants as US corporate entities but alleges that the scheme was "operated by individuals located abroad."

When investors tried to pull their money out, the defendants imposed withdrawal fees as high as 20% and multi-day delays, the complaint says. Eventually, DSJ Exchange blocked withdrawals entirely. The filing alleges the defendants then demanded additional "tax" payments from investors seeking access to their funds and directed them to deposit more assets to migrate to a new platform. Investors who paid still could not withdraw, according to the complaint.

The SEC charges both defendants with securities fraud under the Securities Act and the Exchange Act. BG Wealth also faces charges under the Investment Advisers Act for allegedly failing to produce books and records and filing materially false statements with the SEC. The agency seeks permanent injunctions, disgorgement with interest, civil penalties, and an order blocking BG Wealth from filing Forms ADV as an exempt reporting advisor. Investor losses exceed $100 million, the filing alleges.

These are allegations in a complaint. They have not been tested, and no court has ruled on the merits of the SEC's claims.