The Texas State Securities Board issued three emergency cease and desist orders Tuesday, Sept. 18, to shut down a Russian cryptocurrency scam, charge DigitalBank and two principals for threatening immediate and irreparable harm to the public, and charge a forex and Bitcoin trader of guaranteeing false ROIs, respectively.
Russian Crypto Organization Faces Cyberfraud Charges
According to the first cease and desist order, Coins Miner Investments Ltd. was purportedly parodying emails and manipulating online media to create the impression that it is a legitimate cryptocurrency mining firm in the U.K. However, the Securities Board’s action alleges that Coins Miner is running a complex, online fraud out of Volgograd Oblast, Russia.
The aforementioned spoofed emails appeared to be sent by Coinbase. Ana Julia Lara, an affiliate of Coins Minter and author of a spoofed email, is also accused of claiming to be a vice president of CoinTelegraph Media Group.
In regard to the cryptocurrency mining firm allegations, Coins Miner is accused of fabricating photographs to show its “state-of-the-art office” as well as utilizing stock photographs to portray its employees. A video featuring stock footage of its servers, facilities and financial professionals was also cited.
According to the Securities Board:
“Spoofing and misappropriating the identity of others is an extremely dangerous practice, and it proves especially threatening when directed toward potential investors. Simply put, people are more likely to be more receptive to communications from legitimate sources or trusted parties. Likewise, investors are more likely to decide to send their principal to a company supported by or associated with a reliable organization or person. These decisions, however, are predicated not upon facts but upon a fraud, and that fraud carries a high price–perhaps the entirety of the principal investment.”
DigitalBank Charged with ICO Scam
The Texas State Securities Board’s second cease and desist letter was directed toward DigitalBank, formerly known as DGBK, for claiming to be building an external wallet, known as the Photon Encrypted Ledger Key, and raising capital for an illegal initial coin offering.
In addition to the Photon Encrypted Ledger Key–which reportedly would allow users to buy and sell fiat and cryptocurrencies on an anonymous, unhackable peer-to-peer basis–DigitalBank was found to be offering shares issued by the company as well as DBGK, a utility coin set for an ICO next year.
According to the Securities Board, the company told prospective investors to purchase DGBK at a price of $0.50 and to sell it for $10.00 during the ICO. Per these terms, a $5,000 investment would increase to $100,000 in the ICO period.
The Securities Board, however, concluded the offering deceptive and fraudulent, as the company was misleading investors about the profitability and hiding key information–including the identity of people associated with the company, the identity of a financial institution supposedly backing the company, the costs of producing and distributing the Ledger Key and the risks associated with the investment.
Additionally, DigitalBank is facing charges for using multiple copies of a video featuring President Barack Obama while describing the Photon Encrypted Ledger Key. The videos, according to the Securities Board, are misleading as they were created at the 2016 SXSW festival, several years before DigitalBank’s inception.
Ultimate Assets Ordered Cease and Desist for Misleading ROI Numbers and More
Finally, the Texas State Securities Board issued a third cease and desist letter to Ultimate Assets, which falsely guaranteed investments with a 900 percent ROI in Bitcoin and Forex trading.
Daniel Dishmon and John Jason Woodard are also cited with publishing advertisements for fraudulent investments that target Texas residents.
Per the Securities Board, Ultimate Assets told potential investors that they would be able to provide exorbitant returns. For example, an initial investment of $500 would see a $5,000 return, a $1,000 investment would see a $10,000 return and so on. The company further stated that its trading platform involved no risk and that returns were always guaranteed.
Despite its claims, Ultimate Assets failed to disclose the identity and background of its principals, any information relating to Bitcoin as well as any information relating to its assets, liabilities and capitalization.
Cover Photo by Scott Warman on Unsplash