- DFPI issued desist and refrain orders against 11 different crypto firms.
- The 11 crypto firms allegedly violated Californian securities laws.
- The companies used investors’ funds to pay purported profits to other investors in the manner of a Ponzi scheme.
Today, the Department of Financial Protection and Innovation (DFPI) announced it has issued desist and refrain orders against 11 different crypto firms for violating the California securities laws.
We’ve issued orders against 11 companies for violations of CA securities laws.
“These actions protect consumers & ensure California remains the premier global location for responsible crypto asset companies to start & grow,” says Commissioner Hewlett. https://t.co/FVMSNilJXc pic.twitter.com/iEVy5CTxEh
— Ca Department of Financial Protection & Innovation (@CaliforniaDFPI) September 27, 2022
DFPI claimed that the 11 crypto firms allegedly offered and sold unqualified securities and made material misrepresentations and omissions to investors. The companies used investors’ funds to pay purported profits to other investors in the manner of a Ponzi scheme.
Additionally, each of those crypto companies had a referral program that operated in the manner of a pyramid scheme. The companies promised to pay investors commissions if they recruited new investors and additional commissions if the investors recruited new investors.
The referral programs achieved their desired effect, incentivizing investors to create and post content to social media websites, such as YouTube, to entice others to invest in these entities.
The 11 crypto firms which have violated the California securities law are — Cryptos OTC Trading Platform Limited d/b/a 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 d/b/a World OTC.
According to DFPI Commissioner, Clothilde Hewlett:
The DFPI will continue to protect California consumers and investors from crypto scams and frauds. These actions not only protect consumers but also ensure California remains the premier global location for responsible crypto asset companies to start and grow.
Furthermore, DFPI claimed that an executive order signed by Governor Gavin Newsom in May would direct the department to initiate enforcement actions to stop violations. The executive order will also increase California’s awareness of the benefits and risks associated with crypto asset-related financial products and services.
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