- DFPI issued desist and cease orders against 11 crypto companies.
- The crypto companies allegedly violated California securities laws.
- The companies made use of investors’ money to make promises of profits to investors elsewhere using the Ponzi scheme method.
Today, the Department of Financial Protection and Innovation (DFPI) has announced that it has issued desist and cease orders to 11 crypto companies for violating California securities laws.
We’ve issued warrants against 11 companies for violating California law on securities.
“These measures protect consumers and assure that California remains the top international place to allow responsible cryptocurrency asset businesses to begin and grow,” says Commissioner Hewlett. https://t.co/FVMSNilJXc pic.twitter.com/iEVy5CTxEh
— Ca Department of Financial Protection and Innovation (@CaliforniaDFPI) September 27, 2022
DFPI stated that the crypto companies claimed to have sold and offered unqualified securities and made a number of mistakes and false representations to investors. The firms used investors’ funds to transfer profits to investors elsewhere as part of Ponzi schemes.
Related: California is the seventh state to order Nexo’s interest account.
In addition, each of the crypto firms offered a referral program, which was run in the form of a pyramid scheme. The companies pledged to pay investors commissions for bringing in new investors. They also promised to pay additional commissions if investors brought in new investors.
The referral programmes had their intended effect by encouraging investors to post videos on social media websites like YouTube in order to convince other investors to put money into these companies.
The 11 crypto firms that have violated California securities law include Cryptos OTC Trading Platform Limited under the name of COTP, Elevate Pass LLC, GreenCorp Investment LLC, Metafiyielders Pty Ltd d/b/a Metafi Yielders, Pegasus, Polinur ME Limited, Remabit, Sity Trade, Sytrex Trade, Vexam Limited, and World Over the Counter Limited under the name of World OTC.
In the words of DFPI Commissioner Clothilde Hewlett:
The DFPI will continue to safeguard California investors and customers from fraud and scams involving crypto assets. These measures not only safeguard the consumer but also ensure that California remains the most sought-after worldwide place where responsible blockchain asset businesses can begin and grow.
Additionally, DFPI claimed that an executive order issued by Gov. Gavin Newsom in May would instruct the department to take measures to enforce the law and stop infractions. The executive order is also expected to raise awareness in California about the advantages and risks that come with crypto asset-related financial products and solutions.
Related: California regulator sees 2035 EV mandate as ‘sweet spot’
The article DFPI Issues Orders Against 11 Different Crypto Firms in the US appeared first on Coin Edition.
