The United States Securities and Exchange Commission (SEC) has charged blockchain engineer Eric Zhu, for orchestrating a rug pull fraud. According to the regulator, the engineer defrauded investors in the Game Coin project. If the court greenlights the SEC’s motion of final judgment, Zhu will pay about $832k in restitution for his crimes.
The SEC claimed that Zhu used his position in the project to misappropriate about $553k. The SEC mentioned that the token was sold to investors as a security using liquidity pools. This case could be one of the few the agency handles with Gary Gensler in charge of the agency.
SEC orders GME developer to pay $832k in settlement
According to the agency, Eric Zhu was hired for his coding skills. If the settlement is approved by the court, Zhu will pay $150k in civil penalty without admitting guilt, $553k in restitution, and $120k in prejudgment interest. Rug pull usually happens when liquidity providers withdraw their tokens from the pools, causing the price to become unstable, and leading to losses for investors.
The agency claimed that it was the same act Zhu carried out regarding the GME tokens. The SEC mentioned that the developers of the token claimed liquidity tokens were locked and could not be accessed by issuers or insiders. However, some of the tokens were moved to an address controlled by Zhu. He later sold $553k worth of GME from the ones under his control, causing a 12% dip in the price of the token.
Top SEC officials prepare to leave the agency
The resolution of this case could be one of the last acts of the agency under Gary Gensler’s leadership. However, Gensler has urged the commission to continue its crackdown on altcoins. With Donald Trump assuming the White House very soon, it has proven to be a game-changer for the crypto sector.
Trump has also chosen Paul Atkins, a pro-crypto candidate to lead the SEC. Meanwhile, Bitcoin may well be benefiting from Trump’s swearing-in anticipation, with the token hitting $108k, up by 90% over the last 90 days. The commission also noted that its Acting Director of the Enforcement Division Sanjay Wadhwa will leave his post on January 31.