By james art 
Out of State engineer outside the state has agreed to pay over $ 800,000 after the Securities and Exchange Commission claims to have participated in an investor fraud scheme in Coin gameAn asset for cryptocurrency offered and sold as security mainly to investors residing in or around Baton Rouge.
The game coin was Started in 2021 by Baton Rouge entrepreneurs including David Mahlerwhich are not indicated in the case. The launch aims to allow amateur athletes to create their own digital commercial cards, which can then be purchased and sold on a web-based market using their GME-Tken game coin.
The company attracted local attention to its launch by offering investors the opportunity to take advantage of upcoming athletes and partnered with some such athletes, including LSU players, through deals with name, image and likeness.
Today the game coin serves as an official utility of On fire athletesAn online platform that allows users to create, buy and sell digital sports cards. Representatives of Game Coin did not respond to requests for comment before the afternoon afternoon for publication.
In his initial complaint filed with the Baton Rouge federal court on January 16, SEC claims that the aforementioned blockchain Eric Ju, who lives in New York and was hired by Game Coin to perform coding work, has received control over certain aspects of certain aspects of GME liquidity, cryptocurrency trading mechanism. SEC claims Ju used this control to carry out a “carpet pull”, violating federal securities laws.
How do liquid pools work?
Liquidity pools allow investors to buy and sell cryptocurrencies on decentralized exchanges, eliminating the need for traditional intermediaries. As the name implies, the liquidity pools require liquidity (deposited pairs for trading cryptocurrency).
In the case of a game coin, Gme and Binance Coin deposits – or BNB – remained as the initial liquidity of GME liquidity pool. Investors can, for example, buy GME and deposit BNB or sell GME and download BNB. The value of GME at any given time is determined by the GME to BNB ratio in a liquidity pool. As investors purchased GME using BNB, GME offering in a liquidity pool is reduced and the GME value has increased.
A person who deposits a couple for cryptocurrencies (liquidity) in a liquidity pool receives a “liquidity provider” – or LP tokens – which, absent precautions, allow their holder to withdraw a proportional share of liquidity deposited in the liquidity Pulf. Such liquidity pools create certain risks for investors, including the risk, the holder of a significant amount of LP tokens will withdraw a large part of the pair of a token from a liquidity pool without warning. The marker holder can then sell (deposits) large volumes of one of the cryptocurrencies in question in the liquidity pool, significantly reducing the value of that asset.
The significant withdrawal of liquidity and the corresponding sale of cryptocurrency is often called “pulling a carpet”, as the seller essentially pulls the carpet from under the investors who have purchased assets through the liquidity pool.
Realizing this risk, the guide of the game coins assured investors in publicly available social media publications that liquidity is “locked”, according to documents that convey that the tokens of LP cannot be used by their issues or other internal persons, for to carry out pulling on a carpet.
What exactly is he accused of Ju?
SEC claims that some LP tokens are accumulated only to an address that ZHU is controlled. Unknown to anyone, he held these LP tokens unlocked and used them to download Gme and BNB from the GME liquidity pool. He then sold the downloaded GME in a liquidity pool and illegally misled crypto assets worth approximately $ 553,000. ZHU sales led to a reduction in GME price by approximately 12%, leading to investor panic.
Ju’s behavior violates the regulations for the fight against federal securities laws, according to SEC.
According to the final decision of the SEC, filed on January 17, Ju agreed to a permanent disposal, which took advantage of a further violation of federal securities laws. He also agreed to pay the SEC 822,992, which is common that represents its malicious profits, civil penalties and interest rates for prejudice.
The offered final decision is now awaiting the signature of Judge John Degravel.