The SEC accuses a Texas fund manager of illegally investing $18.5 million of client funds in cryptocurrency

ChainCatcher news, according to DL News, the U.S. Securities and Exchange Commission (SEC) has charged Texas fund manager Khalid Parekh with illegally investing $18.5 million of client funds in cryptocurrency without client consent.

According to the SEC, from August 2021 to August 2022, Parekh raised $18.5 million from 373 investors across 40 states through his sole proprietorship Fair Invest. He primarily attracted investors from the American Muslim community through radio shows, podcasts, and media interviews, claiming that his fund complied with Islamic law.

Parekh promised investors an annual return of 4%, claiming that these returns came from traditional assets such as stocks, mutual funds, commodities, and ETFs. However, the SEC's charges indicate that he actually invested client funds in two cryptocurrency lending platforms without informing investors.

During the SEC investigation, Parekh returned client funds along with the promised 4% returns. Additionally, he agreed to pay a $100,000 fine and revoked his SEC registration as an investment advisor.