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



The California Department of Financial Protection and Innovation (DFPI) has cracked down on 11 cryptocurrency companies accused of violating California securities laws. Nine of the companies are said to have solicited funds from investors in order to trade cryptocurrencies on behalf of the client. One of the accused companies presented an alleged metaverse software development program, and another company claimed to be a “decentralized finance (defi) platform”.

11 Crypto Firms Targeted by California Department of Financial Protection and Innovation

California’s financial regulator, the DFPI, has targeted crypto asset companies and on Tuesday the financial watchdog launched a “crackdown” against nearly a dozen entities focused on digital currency. The DFPI “has issued discontinuance and forbearance orders against 11 different entities for violations of California securities laws,” the regulator said Sept. 27. The state regulator further noted that the operations are accused of running a pyramid or Ponzi scheme.

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

“The entities all allegedly used funds from investors to pay out purported profits to other investors, similar to a Ponzi scheme,” the DFPI said. Press release Remarks. “In addition, each of the entities had a sponsorship program that operated like a pyramid scheme. The entities promised to pay investors commissions if they recruited new investors, and additional commissions if the investors they recruited, in turn, recruited new investors.

The DFPI crackdown follows the cease and desist order it sent to crypto lender Nexo on Monday. Nexo is accused of offering and selling “unqualified securities, in the form of interest income accounts” since “at least June 2020”, the regulator’s complaint details. The 11 forbearance and forbearance orders issued on Tuesday specify that the entities would have offered “classic examples of high yield investment programs (HYIPs).” The 11 crypto companies named in the cease and desist orders include:

  • Cryptos OTC Trading Platform Limited d/b/a COTP
  • Elevate Pass LLC
  • Greencorp Investment LLC
  • Metafi Yielders Pty Ltd d/b/a Metafi Yielders
  • Pegasus
  • Poliur ME Limited
  • Rembit
  • city ​​trade
  • Trade Sytrex
  • Vexam Limited
  • World Over the Counter Limited d/b/a World OTC

During Tuesday’s announcement, DFPI Commissioner Clothilde Hewlett commented on the actions that have taken place against crypto companies accused of Ponzi schemes. “DFPI will continue to protect California consumers and investors from crypto scams and fraud,” Hewlett noted. “These actions not only protect consumers, but also ensure that California remains the premier global location for companies responsible for crypto assets to start and grow,” the commissioner added.

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

Jamie Redman

Jamie Redman is the news manager for News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for News about disruptive protocols emerging today.

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