Lowry, et al. v. Edelman, et al. was filed in the U.S. District Court for the Southern District of New York on September 21, 2021, claiming securities fraud and various state-law causes of action based on a fraudulent scheme to induce investments in cryptocurrency and then embezzle those investments.
Plaintiff Jonathan Lowry alleges defendant Gabriel Edelman fraudulently induced him to invest in cryptocurrency through his company, co-defendant Edelman Blockchain Advisors (“EAB”). Lowry initially earned significant returns on his investment in a cryptocurrency known as WAX. That led Lowry to entrust Edelman with investing his earnings in a different cryptocurrency known as CEL. When CEL’s value skyrocketed, Lowry asked Edelman to liquidate his holdings. But Edelman did not liquidate them. Instead, Edelman absconded with $10 million of Lowry’s money. Lowry alleges he is just one of many victims of this scheme.
The complaint alleges Edelman perpetrated his scheme through EAB and another company, Vix Capital Partners LP (“Vix”), with the assistance of his wife, Chen Edelman; his business partner, Nehemia Markovits; and his attorney, Louis Taubman, among others. According to the complaint, Vix is operated as a Ponzi scheme and its investments are unregistered with the SEC.
Based on this scheme, the complaint asserts violations of Sections 10(b) and 20(a) of the Securities Act of 1934 and SEC Rule 10b-5. The complaint also asserts state law claims for fraudulent inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, promissory estoppel, conversion, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, aiding and abetting fraud, negligence, professional negligence, legal malpractice, civil conspiracy, contractual and common law indemnification, contribution, an equitable accounting, and a permanent injunction.