The US Securities and Exchange Commission has filed fraud charges against a UK citizen accused of operating a scheme that bilked investors through a fictitious bitcoin trading platform and a co-working space company, marking one of the most prominent enforcement actions against a cryptocurrency-related fraud to date in 2017.
TL;DR
- The SEC charged Renwick Haddow, a UK citizen residing in New York, with fraud related to Bitcoin Shop Inc. and Bar Works
- Haddow allegedly used fake executive identities, including a fabricated CEO named “Gordon Phillips” who never worked at the institutions claimed
- More than 80 percent of investor funds for Bitcoin Store were diverted to overseas accounts — $4 million to Mauritius and $1 million to Morocco
- Haddow had a prior eight-year ban from serving as a company director in the UK
- The FBI is also investigating, and two investor-led lawsuits have been filed
The Allegations
According to court documents filed by the SEC, Renwick Haddow created two companies that formed the backbone of his alleged scheme. The first, Bitcoin Shop Inc., was marketed as a platform for trading bitcoin. The second, Bar Works, was positioned as a co-working space company similar to WeWork. Both entities attracted investors under what the SEC now says were false pretenses.
Central to the SEC’s case is the allegation that Haddow fabricated key aspects of Bitcoin Shop Inc.’s operations. The company’s purported CEO, a figure named Gordon Phillips, appeared in promotional videos and was described on LinkedIn as having previously worked for HSBC in London and Hong Kong, as well as Deutsche Bank. The SEC, however, alleges that Gordon Phillips “never worked for HSBC or Deutsche Bank” and that the identity is fictitious — a staggering claim that goes to the heart of the alleged deception.
Following the Money
Perhaps most damning are the allegations about how investor funds were handled. The SEC contends that Haddow diverted more than 80 percent of the funds raised through Bitcoin Store, sending over $4 million from Bar Works bank accounts to accounts in Mauritius and an additional $1 million to accounts in Morocco. These transfers, if proven, would represent a systematic effort to move investor money beyond the reach of US authorities.
Haddow also created a broker-dealer firm called InCrowd Equity, which the SEC says was never registered with the agency. This unregistered operation allegedly served as a conduit for raising funds from investors who may have believed they were participating in legitimate securities offerings.
A Pattern of Deception
The SEC’s complaint also highlights Haddow’s checkered past in the United Kingdom. Court documents note that he previously received an eight-year disqualification from serving as a director of a company in the UK, stemming from his involvement with a firm called Branded Leisure plc. This prior sanction raises questions about how Haddow was able to operate seemingly unhindered in the United States for as long as he did.
The unraveling of Bar Works was first signaled by New York business publication Crain’s, which reported on the company’s collapse amid allegations of fraud. The report noted that Bar Works was the subject of an FBI investigation as well as two investor-led lawsuits. An earlier investigation by The Real Deal in January 2017 had first raised the possibility that fake identities were being employed by the company.
Fidelity Charitable Reports Record Bitcoin Donations
In more positive institutional news, Fidelity Charitable — the donor-advised fund connected to mutual fund giant Fidelity Investments — disclosed that it has raised nearly $9 million in bitcoin during the first half of 2017 alone. This figure already surpasses the $7 million the organization raised in bitcoin during all of 2016, underscoring the growing adoption of cryptocurrency for charitable giving.
Fidelity Charitable’s annual report revealed that nearly $2 billion has been committed through all funding methods since the start of 2017, representing more money given to charities in the first half of the year than at any point in the organization’s 26-year history. The organization first began accepting bitcoin donations in late 2015 and has seen a steady increase in crypto-related contributions as Bitcoin’s price has surged past $2,400.
The disclosure comes just weeks after Fidelity CEO Abigail Johnson took the stage at CoinDesk’s Consensus 2017 conference to discuss the firm’s deepening interest in blockchain technology and cryptocurrencies, particularly in public blockchain networks.
US States Embrace Blockchain Legislation
At the state level, American lawmakers are moving forward with proactive blockchain legislation. Illinois lawmakers have passed a bill creating an intergovernmental blockchain task force that will study public sector applications of the technology. Meanwhile, Delaware — home to more than half of all US publicly traded companies — was expected to advance a bill that would legally recognize stock recorded on a blockchain, a development that could fundamentally change how corporate equity is managed.
These legislative efforts, combined with the US government’s planned Federal Blockchain Forum scheduled for July, signal growing institutional recognition of blockchain technology’s potential beyond cryptocurrency speculation.
Why This Matters
The SEC’s enforcement action against Haddow represents a critical moment for the cryptocurrency industry’s maturation. While bad actors are inevitable in any emerging market, the speed and specificity of the SEC’s response sends a clear signal that cryptocurrency-related fraud will be pursued with the same rigor as traditional securities violations. Simultaneously, Fidelity Charitable’s record-breaking bitcoin donations and state-level blockchain legislation demonstrate that legitimate institutional adoption continues to accelerate. For the broader market, these dual narratives — enforcement and adoption — are both necessary ingredients for long-term credibility and growth.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.