The US regulator alleges that Renwick Haddow, a UK citizen living in New York, created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws. 

Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store, and Bar Works, a chain of co-working spaces located in former bars and restaurants.

According to the SEC’s complaint, offering materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist. The materials also misrepresented other key facts about both companies’ operations. Haddow allegedly diverted more than 80% of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4m (£3.08m) from the Bar Works bank accounts to one or more accounts in Mauritius and $1m (£770,000) to one or more accounts in Morocco.

Andrew Calamari, director of the SEC’s New York regional office, said: ‘As alleged in our complaint, Haddow created two trendy companies and misled investors into believing that highly-qualified executives were leading them to quick profitability. 

‘In reality, Haddow controlled the companies from behind the scenes and they were far from profitable.’

The SEC alleges that materials provided to Bitcoin Store investors claimed it was ‘an easy-to-use and secure way of holding and trading Bitcoin’ and had generated several million dollars in gross sales.  In fact, the SEC alleges that Bitcoin Store has never had any operations nor generated the gross sales it touted. 

In 2015, for example, Bitcoin Store’s bank accounts allegedly received less than $250,000 in incoming transfers, none of which appear to reflect revenue from customers.  According to the SEC’s complaint, the corporate address used for Bitcoin Store was Haddow’s residential address minus the apartment number.

According to the SEC’s complaint, Bar Works claimed to bring ‘real vibrancy to the flexible working scene by adding full-service workspaces to former bar and restaurant premises in central city locations.’  Bar Works primarily sold leases coupled with sub-leases that together functioned like investment notes.  The company also allegedly sold leases for more workspaces than actually existed in at least two locations. 

Among false claims made to investors, who invested more than $37m in the Bar Works scheme, were that a location was profitable within months of opening and that Bar Works had engaged an auditor.

In a parallel action, the US attorney’s office for the southern district of New York has announced criminal charges against Haddow.

Haddow has previously been under investigation in the UK. In December 2008 an Insolvency Service investigation into a company called Branded Leisure plc, where he was named as the finance director, resulted in Haddow being given an eight-year disqualification from being a company director.

The company was supposed to be operating a number of ‘Cosmopolitan Spirit’ venues aimed primarily at attracting women between the ages of 18-35. Despite claims that new units were opening regularly, only one in Manchester opened to the public. This was after it incurred a substantial overrun in capital expenditure and once opened, signally failed to achieve forecast sales revenue. The company shortly afterwards ceased trading and was placed in a Creditors Voluntary Arrangement (CVA), with a £2m loss to shareholders and creditors.

Haddow is also named as a defendant in an ongoing legal case brought by the Financial Conduct Authority (FCA) against a company called Capital Alternatives Ltd, over claims that along with several other connected firms and individuals, it was promoting and operating collective investment schemes without authorisation. The latest stage of the claim is scheduled to be heard at the High Court some time later in July.