Steven Chiang (also known as Cyrus Kong), Eric Tippetts, James Hardy, and Maurice “Butch” Chelliah have all been sued by the SEC.
According to the regulator, the defendants’ ShareNode and Nasgo Ponzi schemes defrauded consumers of millions of dollars.
The development of Nago and NSG tokens was started by Stephen Chiang in 2015.
Chiang first met Tippetts in 2012, and the two of them started Nasgo in December 2017.
Nasgo was a classic cryptocurrency shitcoin money grab that failed.
Tens of thousands of new clients would be signing up every day, and the number of new clients would increase to millions per day in two years, according to Chiang and Tippetts. They also claimed that early investors would receive automatic, regular payments in NSG tokens that would increase in value as NSG token demand increased.
Nasgo was promoted as the “world’s first trillion dollar blockchain” by Chiang and Tippetts.
The result of Nasgo’s failure were 1 BTC or 25 ETH “Founding Delegate” seats. This amounted to $16,625 and $20,475 at the time, respectively.
Chiang and Tippetts guaranteed Founding Delegates 25,000 NSG tokens up front and a yearly pro-rata portion of 8.5 million NSG tokens in return for acquiring a Founding Delegate interest.
In essence, early NSG investors were idiots who hoped to defraud those who came after them.
Tippetts lying about sold-out Founding Delegate slots was the culmination of Nasgo’s failure.
Tippetts said in a YouTube video that the interests of the Founding Delegates had been sold out on May 4, 2018.
There were 1000 openings for Founding Delegates.
Tippetts was irresponsible in his ignorance of the fact that this assertion—that the interests of the Founding Delegates were sold out—was untrue.
He was aware that, contrary to what he had represented publicly, NASGO had only really sold about 40 Founding Delegate stakes in the US, raising no more than $837,000.
Tippetts was in charge of distributing invites for a July 2018 Founding Delegate call that he chaired, thus he was aware of this among other things.
Tippetts promised 1,000 Founding Delegates, but only sent 42 email invitations for that call.
Despite being aware of this, Tippetts continued to assert falsely at the conference in July 2018 that all 1,000 Founding Delegate interests had “sold out very rapidly.”
ShareNode was released around this period. BehindMLM first learned about Nasgo via ShareNode.
James Hardy (right) and colleague Maurice Chelliah were hired by Chiang and Tippetts, according to ShareNode.
Sharenode claimed to be “powered by NASGO” and “the marketing division of NASGO.”
Together, Tippetts and Hardy, who had extensive multi-level marketing (“MLM”) expertise, promoted and sold the SNP token, unregistered digital asset security issued by Sharenode.
It was a conventional Ponzi scam, ShareNode. On the promise of passive profits, paid in SNP and NSG tokens, affiliates invested in SNP tokens.
ShareNode received almost $10 million in total from affiliate investors.
One issue MLM cryptocurrency Ponzis runs through is dump pressure from token selling off.
To combat this, ShareNode’s business strategy anticipated manipulation in the Ponzi fashion. At the very least, that was the basic plan.
Tippetts and Hardy created the SNP token’s worth from the beginning, and the implied growth in value never happened for investors.
In reality, Tippetts and Hardy ceased raising the price at which they sold SNP tokens within the first few months of the June 2018 debut, without informing investors.
Because of this, SNP token manipulation was feasible.
All SNP token transaction data was saved by Sharenode in a database kept on a single server.
Hardy and the outside web developers for Sharenode were aware that no blockchain was keeping track of SNP token transactions. At the very least, Chelliah was careless in her ignorance of the fact that SNP token transactions were not stored on any blockchain.
NSG refunds weren’t made, either.
The NSG token balances of Sharenode investors increased, but such transactions were not shown on the NASGO blockchain.
Withdrawals from ShareNode/Nasgo had to go via Tippetts, as opposed to a true blockchain where anybody may sell if there is a buyer.
Tippetts had to personally approve any NSG token distribution procedure, with incentives paid out of a wallet he controlled. Investors could not withdraw or trade their alleged balance of NSG tokens without his permission.
Tippetts and Chiang started a public exchange exit scam as the math underpinning ShareNode and Nasgo inexorably spiraled out of hand.
The two did this by paying “at least 100 BTC” (about $615,000) to the dubious CEO Jason Luo-run Chinese exchange BitForex in return for a listing.
Tippetts and Chiang misappropriated at least 50 bitcoins from Sharenode investors without the knowledge of Sharenode investors to pay BitForex to sell the NSG tokens.
Theoretically, this listing would make it possible for owners of NSG tokens to sell and exchange their digital assets with other market players.
I’m not sure why, but BitForex received just 50 BTC for some reason.
Chiang and Tippetts paid an additional 83 BTC from ShareNode investor cash to influence NSG’s value after the exchange-listed it.
Tippetts and Chiang used WeChat to converse often. Chiang defined “market-making” for Tippetts in those WeChat conversations.
For instance, Chiang wrote Tippetts the following on January 26, 2019:
I have a four-person market-making team. They put on a 24-hour shift to accomplish that, buddy. Our market valuation is currently between 300 and 400 million dollars, making us in the top 20… We must consistently maintain this for 100 days before we can enter the coin market cap.
Chiang added the following details on January 26, 2019:
With the market growing, the globe will soon witness more and more individuals in the public understanding the NSG’s numerical significance.
With us continuing at the existing pricing range, then…
The market should begin purchasing NSGs and engage in competition for discounts
Tippetts was therefore aware that Chiang was in charge of and engaged in price and volume manipulation of NSG tokens.
Tippetts was also aware that Chiang and his market makers were the “largest players” when it came to trading NSG tokens on BitForex; yet, no one connected to NASGO ever informed investors about Chiang and his group’s predominance in NSG token trading on BitForex.
NSG pumped after being listed in January 2019. However, NSG’s pump failed to draw in enough fresh suckers, which led to the eventual spill.
Tippetts, Hardy, and Chelliah’s Sharenode sales pitch focused heavily on the alleged chance to receive NSG token incentives that could be exchanged for cash on BitForex.
Chiang reprimanded Tippetts in a WeChat message at the beginning of April 2019 when certain SNP token owners started selling their NSG tokens on BitForex.
These sales overflowed the market with NSG tokens, making it impossible for Chiang’s market makers to keep the price of NSG tokens constant.
Tippetts offloaded to Hardy after being “pounded” by Chiang repeatedly as their Ponzi scheme crumbled.
2019-04-04 Tippetts wrote to Hardy the following:
Recently chatted with Steve Chiang…
He is really worried that we don’t have enough money to stabilize NSG since the guys we are sending out sell it for between $150 and $300k each day.
Steve is out of money and unable to pay developers to keep the market rising.
On April 22, 2019, Tippetts iMessage Hardy with the following message:
Steve continued to push withdrawals on me last night and kept crashing NSG. They are essentially selling, and the money from market makers is going into Steve’s pocket.
I have to transfer fewer data at once.
However, Ponzi math is Ponzi arithmetic, and on May 3, 2019, “Chiang and Tippetts blocked all NSG token withdrawals from the wallets of SNP token holders,” according to the report.
Five days later, on May 8, BehindMLM reported the ShareNode and Nasgo failure.
The SEC is suing Steven Chiang, Eric Tippetts, James Hardy, and Maurice Chelliah for securities fraud across three claims of relief.
specifically, transgressions of
Sections 5(a) and (c) of the Securities Act, Section 17(a) of the Securities Act (all defendants), Section 10(b) of the Exchange Act (Chiang, Tippetts, and Hardy), and (all defendants)
Along with civil fines and disgorgement of ill-gotten riches, the SEC is requesting a permanent injunction against the defendants.
Five months before its collapse, in January 2019, BehindMLM examined ShareNode and Nago.
Our investigation led us to the conclusion that ShareNode, Nasgo, and its management had committed securities fraud.
The fact that NSG and SNP tokens are securities should be painfully evident. Affiliates of ShareNode are investing in SNP with the hope of earning a passive return that is entwined with SNG tokens.
ShareNode and Nasgo must register their respective tokens with the SEC to function lawfully in the US.
ShareNode, Nasgo, Stephen Chiang, Eric Tippets, or James Hardy are not SEC-registered at the time of publishing.
This implies that ShareNode and Nasgo are fundamentally engaging in securities fraud.
As I write this, BehindMLM’s evaluation of ShareNode has 399 comments. Many come from shareholders of ShareNode/Nasgo, who at the time were emphatic that I was mistaken.
Oz? Are you actually in a good headspace? You aren’t even consistent with yourself because you dispute your own “analysis”!
Here is what happened to the money invested in Nago and ShareNode, as it does in every MLM Ponzi fraud.
In the end, the investor cash would go into the wallets of Chiang, Tippetts, Hardy, and Chelliah, who would then spend the money on different personal costs.
Sharenode and NASGO never had an exclusive business checking accounts.
Instead, millions of dollars from investors poured into several bank accounts, cryptocurrency wallets, and Hardy’s PayPal account, which were all directly controlled by Tippetts, Hardy, Chelliah, and others.
Tippetts received at least $1.5 million from Sharenode and NASGO investor money, Hardy kept at least $1.3 million, and Chelliah kept more than $200,000, according to a review of the activities in these accounts. Hardy kept at least $1.3 million, too.
This plundered cash was used to pay for their mortgage, their cars, their credit cards, their loans, and a variety of living costs.
Tippetts also allegedly initiated the transfer of hundreds of bitcoins to wallets under Chiang’s control.
Chiang confirmed receiving more than $1 million in Sharenode investor funds from Tippetts in WeChat messages sent on December 15, 2018, and January 17, 2019.
The remainder was distributed to other Ponzi scheme insiders and promoters.
Eric Tippetts attempted to reinvent himself by disguising himself as a children’s charity after defrauding clients out of millions.
To Asia, Steven Chiang eloped (the SEC cites Chiang as a US visa holder residing in Singapore). In late 2020, he then started the Global Sponsorship Network Ponzi scam there.
Global Sponsorship had already failed twice by the middle of 2021. The third relaunch doesn’t seem to be off to a good start.
To intimidate anyone who protested about ShareNode and Nasgo investment losses, James Hardy engaged a lawyer.
We discovered the SEC was looking into Hardy through an email between Hardy’s attorney and a BehindMLM reader in late 2019.
as stated in the SEC’s lawsuit;
Hardy entered a guilty plea to criminal fraud in California in 2019 after using an elderly client’s investment assets as part of an unrelated scam.
To create a timeline to counter the threats from Hardy’s attorney, I looked for information on this case. Strangely, I had no luck finding anything.
After ShareNode and Nasgo, Maurice Chelliah (right), also known as Butch Chelliah, appears to have maintained a low profile.
once more, as stated in the SEC’s lawsuit;
Chelliah had Series 6, 26, and 63 securities licenses from 2001 to 2013, and from 2000 to 2010 she worked with several licensed broker-dealers. Chelliah was banned in 2013 by the Financial Industry Regulatory Authority (“FINRA”) for improper management of investor cash.
The Nago/ShareNode SEC lawsuit has been added to BehindMLM’s schedule. Watch for updates…
11th May 2022 update The SEC filed two applications for judgment on May 2nd, one against Eric Tippetts and the other against Maurice Chelliah.
Due to problems with local filing regulations, the motions were struck from the record. A statement regarding agreeing to “Magistrate Judge jurisdiction” wasn’t made.
There haven’t been any new filings as of the update. I’m guessing that eventually, the SEC will resubmit its judgment petitions with the right signatures.
I regrettably do not have access to the original files to view the consented judgments because the motions were struck (effectively settlements).