KDH Sues Crypto Fund Manager Alleging Fraud

KDH Consulting Group, an internet tech support and consultation company, has filed a legal complaint against Iterative Capital Management, a cryptocurrency investment manager, for alleged “fraud and breach of fiduciary duties.”

According to the court documents filed on April 27, the investment manager has falsely represented their previous investment and trading success with digital currency, luring KDH for investment.

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“They first rushed Plaintiff into subscribing to a “hedge fund-like” cryptocurrency investment and trading fund by misrepresenting prior performance history and liquidity options; then, intentionally diverted from the fund’s stated investment objective and utilized the fund and its resources as their personal piggybank to build out mining operations and, separately, profit from a related over-the-counter cryptocurrency trading business,” the court filing stated.

The investment by KDH was made in December 2017 when the crypto market was running towards its peak.

The plaintiff alleged that, at the time, Iterative Capital knew that cryptocurrency trading was not a viable investment strategy and planned to use the funds in cryptocurrency mining operations.

Per the court documents, the fund manager returned the funds of its previous investors for the same routing of funds.

“Defendants’ offering documents were similarly misleading and failed to disclose primary investment objective and strategy, properly describe the conflict of interest with affiliated entities, or reflect Iterative’s actual prior performance,” the documents added.

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KDH invested $1 million in the fund and attained the status of a limited partner. Though the investor approached the fund manager for withdrawal after the 2017 market crash, they were assured that the funds were safe.

“While continuing to make promises of immediate liquidity and opportunity to withdraw funds, Defendants locked most of the funds in the mining “side-pocket” not subject to withdrawal,” the court filing added.

KDH is now claiming relief against twelve causes including fraud and violation of securities law.

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