- Khalid Parekh targeted members of the Muslim community in the US.
- Over one year, he solicited $18.5 million in customer funds.
- He didn’t tell clients he was earning money for them on crypto lending platforms.
A Texas money manager who catered to Muslim clients illegally invested $18.5 million of their money into cryptocurrencies without their knowledge, the US Securities and Exchange Commission said Monday.
From August 2021 to August 2022, Khalid Parekh, the sole owner and manager of a firm called Fair Invest, solicited $18.5 million in funds from 373 investors in 40 states, according to the SEC.
Through radio shows, podcasts, interviews, and other media, he targeted members of the Muslim community in the US and said his fund complied with Islamic law.
He promised investors a 4% year-over-year return on their money.
Parekh said he was generating the promised yield from investing in conventional assets, like equities, mutual funds, commodities, and exchange-traded funds, according to the SEC’s settlement announcement.
Instead, the investment manager was earning money from allocating customers’ money to two crypto lending platforms, according to the SEC’s complaint.
The agency did not specify which lending platforms Parekh used, and an SEC spokesperson declined to comment further on the settlement.
Parekh did not respond to a request for comment.
Crypto crackdown
The investment manager agreed to a $100,000 fine for allegedly misleading his customers. During the SEC’s investigation, the investment manager returned his clients’ funds, along with the 4% promised interest.
He also withdrew his registration with the SEC as an investment adviser.
The settlement comes as the SEC’s flurry of crypto charges and suits have petered out after the end of the federal fiscal year in September.
The crypto faithful hope that the SEC’s crackdown is nearing an end.
Gary Gensler, the current chair and longtime foe of the crypto industry, has said he will step down on January 20, the day of Donald Trump’s inauguration as president.
Industry executives believe that Trump, who has said that he’s a “crypto president,” will nominate a crypto-friendly head of the agency.
Updated on November 26 to say that the SEC declined to comment further on the settlement.
Ben Weiss is DL News’ Dubai Correspondent. Got a tip? Email him at bweiss@dlnews.com.