The Paycheck Protection Program, which contains $660 billion to relieve US businesses of the economic challenges brought about by the pandemic, handed out financial aid to crypto firms accused of fraud
Data from the Small Business Administration reveals that 10 blockchain companies in the US were sanctioned by the Securities and Exchange Commission (SEC) for fraud for offering non-registered securities and for receiving COVID-19 aid from the US Paycheck Protection Program (PPP).
Some of the crypto companies that were given PPP financial aid either did not have a connection to the US or were re-incorporated into other jurisdictions.
The PPP, which was drafted by the US Congress and signed into law by President Donal Trump, is meant to assist businesses with keeping their workforce employed throughout the economic crisis brought about by the pandemic. They provide loans to eligible businesses to help prevent job losses.
The federal government may forgive these loans if employers use a large portion of the funds to pay payroll expenses or property-related operational expenses.
The Government Accountability Office, released a report last month that highlighted how PPP is vulnerable to fraud and “improper payments”.
The SBA has not given details on how it plans to approach, identify, and respond to risks in the program.
“SBA’s PPP is the largest of these programs and one of the first to be implemented. However, the limited safeguards and lack of timely and complete guidance and oversight planning have increased the likelihood that borrowers may misuse or improperly receive loan proceeds.” the report read.
The PPP’s total pool of $660 billion may make the amount provided to the SEC-sanctioned companies seem minute in comparison — some of the funds amounted to less than $150,000 each. However, there is also a lack of indication to prove that these companies obtained federal funds fraudulently or in violation of any other rules.
The PPP was enforced to assist with all businesses, particularly small to medium-sized (SMEs) establishments, in maintaining their employees and riding out the coronavirus pandemic’s initial surge.
In July, a Houston man was taken into custody for allegedly obtaining and using more than $1.1 million of PPP loans fraudulently to purchase cryptocurrency and pay off some personal expenses.
29-year-old Joshua Thomas Argires was charged in a criminal complaint for allegedly making false statements to financial institutions, committing wire and bank fraud, and engaging in unlawful monetary transactions.