(Source: Law360.com ) Andrew R. Katz, aka Ross Katz, an Arvada, Colorado man who claims to be a former UBS equity research analyst and a former FX trader for EFG Bank, and now presents himself as co-founder of Seaquake.io, a”digital asset infrastructure company”, along with Seaquake CFO Matthew J. Krueger of San Francisco, who claims to be a former PayPal “Finance Manager” and the former “Head of Finance” for Venmo, have both been named as Defendants in a Federal Court complaint alleging the two men advanced a systematic scheme to defraud a Florida-based investor group. Also named in the action is Dylan Knight, a UK man who is listed as a co-founder and Chief Technology Officer. The complaint cites multiple accounts of securities fraud, fraud in the inducement, and wire fraud.
According to the Federal Court complaint, Katz, who lists former jobs at UBS Bank and EFG Capital-despite Finra having no record of Katz being licensed by that securities industry regulator at any time, made a series of representations that induced the investors to enter into a so-called “SAFE Agreement” with the company. Investors were of the belief the funds would be deployed to a high-frequency trading application that Seaquake principals, including so-called CTO Dylan Knight of the UK claimed to be operating.
According to the complaint, only several days after the investors executed the agreement with the company and wiring funds to a Seaquake account at Signature Bank in New York, Katz then informed the investors the high-frequency trading application was “not in fact in production and the [investor] funds would be placed into a money market account until such time as the software was ‘production ready.” Defendants Krueger and Katz made a series of assertions as to pending institutional investors committing to provide capital to Seaquake, all of which turned out to be false, according to the filing. According to court documents and independent background searches, it turns out that Katz has drivers licenses in New York, Florida and other states, and Katz has a history of criminal charges, from trespassing charges in New York to domestic abuse charges in Los Angeles.
Once the investors realized they had been scammed and demanded the return of the funds, Katz and Krueger took steps to dissolve “Seaquake Partners LP”, the corporate entity the investors sent their funds to, according to the corporate register agent. According to records in the filing, Defendants Katz and Krueger wrote to the investor informing “we will not communicate with your attorney and we have no obligation to provide any further information..” Concurrently, the Defendants transferred the investor funds from the company account at Signature Bank in New York to multiple, newly-created Seaquake entity accounts at a Compass Bank BBVA branch in California, near where Krueger lives. Thereafter, bank records indicate Katz and Krueger dispersed the funds among internal company accounts, then transferred a bulk of the investors funds to accounts at crypto exchange Coinbase and also moved tens of thousands of dollars to personal accounts the defendants established at Compass Bank.
While much of the information obtained in the federal court filings may seem to be the source of good fodder for a ten cent crime novel, according to one Switzerland-based venture capital executive who is focused on the digital currency space and who had also been solicited by Seaquake to serve as both an advisor and to provide investment funds, “All of the patented elements of old-fashioned investor fraud have been perpetrated by these Seaquake characters, casting yet another shadow of skepticism on the entire digital asset industry. It is amazing how brazen these individuals are. Based on their apparent actions, and whether or not they get caught by law enforcement officials, they have effectively destroyed any future professional career in any industry.”
Despite all of the shenanigans, David Streltsoff, a Senior Vice President for San Francisco broker dealer “US Capital Global” is apparently not deterred from associating himself with Seaquake. According to his LinkedIn profile Streltsoff signed on as “Business Development Executive” for the company in September. Streltsoff has apparently not responded to a federal court subpoena for information.