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SEC Charges 2 With Fraudulent Water-Backed Token Sale

Danny Nelson

The U.S. Securities and Exchange Commission charged a former Texas pastor and his wife for allegedly defrauding hundreds of investors through an alkaline water-backed cryptocurrency, TeshuaCoin.

Larry Donnell and Shuwana Leonard were charged Friday with defrauding investors by allegedly stealing nearly $500,000 in the sale of bogus stock certificates and shilling an alkaline water-backed cryptocurrency and a non-existent bitcoin mining operation.

The Leonards are accused of specifically targeting the African-American community in this alleged scheme. Their companies, Teshua Business Group and Teshuater, are also named as defendants.

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The Leonards allegedly attempted to sell phony stock in their alkaline water bottle company, Teshuater, which they said would yield “short-term investment returns of up to 3,000 percent” according to the complaint. This raised $291,044.07.

Larry Leonard is also accused of shilling Teshuater’s “fully functioning cryptocurrency,” TeshuaCoin. 

The complaint says he compared TeshuaCoin’s usability to bitcoin (BTC) and touted its “unique” attribute – it was backed by Teshuater’s bottled alkaline water. The SEC alleges TeshuaCoin was not actually backed by Teshuater. Leonard allegedly raised $170,395.20 out of his target $20 million through this scheme.

Leonard allegedly stole an additional $25,544.96 from investors in Teshuater’s non-existent bitcoin mine. The SEC said he failed to disclose the speculative nature of bitcoin mining and never actually invested the stolen funds in the mine.

Related: SEC Seeks More Feedback on tZERO’s Proposed Security Token Exchange

Along the way, the couple is said to have stolen $486,984.28 from 500 total investors.

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