California Launches Crackdown on 11 Crypto Firms Accused of Operating Ponzi Schemes

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The California Department of Financial Protection and Innovation (DFPI) has cracked down on 11 cryptocurrency companies that have been accused of violating California securities laws. Nine firms allegedly solicited funds from investors to trade cryptocurrencies on behalf of clients. One of the accused firms introduced the alleged Metaverse software development scheme, and another firm claimed to be a “decentralized finance (DeFi) platform”.

11 crypto firms targeted by California’s Department of Financial Security and Innovation

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California’s financial regulator DFPI is targeting crypto asset companies and on Tuesday, the financial watchdog launched “action” against nearly a dozen digital currency-focused entities. The DFPI “issued orders against 11 separate entities for violations of California securities laws,” the regulator said on Sept. 27. The state regulator further said that the operation is accused of running a pyramid or Ponzi scheme.

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California initiates crackdown on 11 crypto firms accused of operating Ponzi schemes

“All the entities are alleged to have used investor funds to pay alleged profits to other investors in the form of a Ponzi scheme,” the DFPI said. Press release notes. “In addition, each institution had a referral program that operated as a pyramid scheme. The entities promised to pay investors commissions if they recruited new investors, and additional commissions if they recruited investors. recruiting, they in turn recruit new investors.

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The DFPI’s action follows a cease-and-desist order sent to crypto lender Nexo on Monday. Nexo has been accused of offering and selling “unqualified securities, in the form of accrued interest product accounts,” since “at least June 2020,” the regulator’s complaint details. The 11 deferment and abstinence orders issued on Tuesday detail that the entities allegedly set “excellent examples of high-yield investment programs (HYIPs).” The 11 crypto companies named in the Deceist and Refrain Order include:

  • Cryptos OTC Trading Platform Limited D/B/A COTP
  • Elevate Pass LLC
  • Greencorp Investment LLC
  • Metafiyielders Pty Ltd d/b/a Metafi Yielders
  • Pegasus
  • Polynoor ME Limited
  • Remabit
  • City Trade
  • citrex trade
  • vexum ltd

During the announcement on Tuesday, DFPI Commissioner Clotilde Hewlett commented on the actions taken against crypto firms accused of Ponzi-like operations. “DFPI will continue to protect California consumers and investors from crypto scams and fraud,” commented Hewlett. “These actions not only protect consumers, but also ensure that California remains the premier global location for responsible crypto asset companies to start and grow,” the commissioner said.

What do you think about the California regulator cracking down on 11 different crypto companies? Let us know what you think about this topic in the comment section below.

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