The Department of Financial Protection and Innovation (DFPI) in California has joined the bandwagon with other state regulators in cracking down on cryptocurrency organizations that violate security laws. These companies allegedly give out counterfeit schemes and services to investors.
11 Decentralized Entities Sued for Sham Investments Programs
The decentralized ecosystem is much beneficial for investors; however, it harbors fraudsters who offer ineligible services for small-scale users. The DFPI has now launched refrain and desists orders to 11 virtual asset organizations which sell and offer unqualified securities. Ten of them are accused of making informational omissions and misinterpretations of capitalists.
Amongst the organizations, one of the companies beseeched decentralized assets with claims on developing the metaverse software. The other claimed to be a decentralized finance platform (Defi). The other nine of these organizations took crypto funds from people to trade virtual assets for their users. Currently, Voyager and Celsius filed for chapter 11 bankruptcy amid banned crypto organizations.
The organizations are allegedly accused of offering Ponzi schemes in the name of claiming investor funds in return, offering profits to them. Moreover, they are also cited for running illegal referral programs to their clients as they are incentivized to refer their organization to other interested users.
After referral, capitalists are promised to earn rewards for each referral for any additional member from the so-called pyramid scheme. Due to the project’s growth, users reached a point of advertising the companies on social media webpages, including YouTube, Facebook, and Google.
Vague High Yield Investments Programs on the Rise in California
According to a statement, the DFPI commissioner, Clothilde Hewlett, argued that the Department of Financial Protection and Innovation would continue to protect the state’s investors and consumers from cryptocurrency frauds and scams. Furthermore, the actions enforced on these entities will ensure California remains the premier worldly location for digital assets to commence and grow and protect its small-scale internal investors.
The accused organizations are as follows: Elevate Pass LLC, Cryptos OTC Trading Platform Limited, Pegasus, Remabit, Sytrex Trade, Vexam Limited, World over the Counter Limited, City Trade, Greencorp Investment LLC, Polinur ME Limited, and Metafi Yielders.
California has named these entities as examples of high yield investments programs (HYIPs) whereby they offer high returns with low risks and overly consistent returns, which in turn, at times, is difficult for the crypto market as they are volatile.
Moreover, these organizations provide few details concerning the individuals running the HYIP, offer referral bonuses, use social media to attract attention, facilitate withdrawals and deposits with virtual assets and utilize vague language while describing how the HYIP makes money.
Regarding recent reports, Governor Gavin Newson signed an executive order to implement consumer protection and bolster the state’s economical and responsible innovations. According to the executive order, it is by law to be applied to eradicate fraud and scams to stop consumer violations. A step that will raise awareness to the imminent investors in the field of decentralized finance.
The DFPI has encouraged consumers who had experienced unlawful, deceptive, unfair and abusive practices from financial service providers to file complaints with the department online.
Sourced from crypto.news.
Written by Adam Robertson on 2022-09-28 11:57:25.
