A man in Washington named Malachi Salcido is being sued by multiple investors who claim he falsely touted himself as a crypto mining expert.
Malachi Salcido Is Being Sought for Misuse of Funds
Salcido allegedly owned a company called Step Change, which was built to mine and extract new digital coins. Investors plunked down as much as $8.5 million into the company, only to see it completely dissolve not long after. They are now out all that money and say they were lied to and fibbed by the owner. A class-action suit is proceeding against Salcido by those who put funds into the firm.
In addition, Salcido is accused of embezzling the funds in question or “misspending” as much as $2.4 million. While the money was initially meant to boost the business and expand its operations, it appears Salcido spent it on personal rents and other items that had nothing to do with Step Change.
Susan Preston of Seattle Angel Fund appears to be at the head of the legal game. Her company was one of the largest investors in Step Change and invested during a Series A funding round in 2017. In an interview, she commented:
Management and transparency to the shareholders has been abandoned and lost… Our immediate goal is for an independent third-party receiver to take control of the company’s operations with court oversight to conduct a thorough analysis and restore company operations consistent with the rights and expectation of the shareholders.
A spokesperson for Salcido is denying the allegations and said that Salcido and his enterprises are fully committed to engaging in “ethical business practices.” The spokesperson said:
We have followed the guidelines specified in all formal agreements and have provided documentation and disclosure information in accordance with SEC requirements. We dispute the allegations, we remain committed to our values, and we hope to resolve this matter soon.
One of the big issues brought up in the lawsuit is that Salcido allegedly overcharged on management fees. By the summer of 2018, he was charging $57,000 a month (ironically bitcoin’s price today), though investors say that these fees should not have exceeded $16,500. Thus, Salcido was potentially charging more than three times what was deemed necessary.
Investors Aren’t Happy
It is also stated that Salcido overcharged on the rent fees for various data centers. Thus far, investors in Step Change hail from regions such as Seattle, Luxembourg and Sweden. The lawsuit was filed on their behalf on March 1 of this year.
At 46 years of age, Salcido says he first got into the bitcoin world back in 2013. Five years later, he claimed to own more than four percent of the world’s mining capacity. He was even featured on programs such as CNBC due to his alleged knowledge and control in the crypto space.
