The U.S. Securities and Exchange Commission (SEC) has charged two now-defunct cryptocurrency firms and their executives for allegedly running a pump-and-dump scam worth $36.8 million from 2017 until 2019 via a token called 'Dignity' (DIG).

The SEC filing relates to Arbitrade Ltd., a Bermudan company, and Cryptobontix Inc., a Canadian company, and their founders Troy R. J. Hogg, James L. Goldberg, and Stephen L. Braverman. The filing also named Max W. Barber, a so-called international gold trader and the founder of SION Trading FZE, as a relief defendant.

Per details of the case, the defendants issued announcements falsely claiming that Arbitrade has acquired and received title to $10 billion in gold bullion. The announcements added that the gold purchase had been audited by an accounting firm to verify its existence.

The firms went ahead to lure investors, most of whom were U.S. citizens, with these claims. They sold over $36.8 million worth of DIG tokens at inflated prices under the guise that each DIG token was backed by $1 worth of gold.

The SEC has so far found that the Ethereum-based DIG tokens were created by Russian developers and only used to defraud investors. The investigation was conducted by David Staubitz and Crystal Ivory in the Miami Regional Office and was supervised by Chedly C. Dumornay, Fernando Torres, and Glenn S. Gordon.

The SEC's litigation is led by Alice Sum and supervised by Teresa Verges, who is charging the accused with violating the Securities Act of 1933 and the Securities Exchange Act of 1934.

"The SEC’s complaint charges the defendants with violating the antifraud and securities registration provisions of the federal securities laws," the filing said.

The watchdog is seeking for them to