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Following a background investigation on three fraudulent schemes involving cryptocurrency, the Texas Securities Commissioner, Travis J. Iles, on Tuesday 18th September 2018 entered three separate emergency cease-and-desist orders against three alleged crypto-scamming investments – Coins Miner Investment Ltd., DGBK Ltd., and Ultimate Assets LLC.
1. Coins Miner Investment Ltd.
Coins Miner Investment Ltd. is one of the three crypto-scamming investments based in the Russian city of Volgograd. The alleged Russian Hoaxers is being accused of many fraudulent acts involving cryptocurrencies.
One of such fraudulent acts is soliciting funds from Texas residence under the pretense that it represents an established U.S. cryptocurrency platform.
This it does by manipulation its emails to appear as though they came from a San Francisco-based company called Coinbase, which owns an online exchange platform where people buy, sell, and store digital currencies.
According to the Emergency Cease and Desist Order, a certain Ana Julia Lara who worked for Coins Miner, had reached out to potential investors claiming she is a cryptocurrency trader with Coinbase. To further support her claim, she sent a photograph of herself with the president of Ripple to prospective investors. The supposed Lara in the picture has been later identified as the Vice President of CoinTelegraph Media Group.
Crypto-investors who fall prey to this scam are directed to a platform owned and maintained by Coins Miner. This platform is said to be designed in such a way that potential investors will find it difficult to detect its un-authenticity.
Among its many fraudulent acts is the manipulation of a video of a Fortune journalist as a means of advertisement and many other publicly available videos to show its supposed expert team.
Although the Coins Miner investments are securities under Texas law, their offerings are not registered for sale in Texas which makes their act of selling securities fraudulent.
2. DigitalBank (DGBK) Ltd.
According to the Emergency Cease and Desist Order, this Belize-based company defrauded crypto-investors of their hard-earned money by telling them it is developing a hack-proof device (called Photon Encrypted Ledger Key), which would help store and transfer cryptocurrencies.
On approaching potential crypto-investors, the DGBK principal or principals offered them both shares in the company and the opportunity to buy DGBK (DigitalBank’s virtual currency), claiming that they can earn a return of 1,900% when the digital token would be sold on the initial coin offering scheduled to hold next year.
One of their schemes included the use of a 33-second video of President Barack Obama discussing advances in technology and encryption that allowed the creation of impenetrable devices to manipulate potential investors.
The order admitted that the investments DigitalBank is offering are regulated by Texas law but the company does not have the backing of the law to sell securities in Texas.
3. Ultimate Assets LLC
Ultimate Assets LLC, which claimed it is situated in Arlington, Massachusetts, is now known for defrauding crypto-enthusiasts by publishing an online advertisement aimed at getting Texas crypto-investors to invest in its cryptocurrency and foreign exchange trading program. The company told potential investors that an initial investment of $1,000 would yield a $9,000 profit, giving a total of $10,000 within a duration of three weeks. In a bid to make it sound genuine, they offered to refund the capital invested if the investment wouldn’t go as planned.
While these investments being offered are securities registered under Texas law, the company and its principals, Daniel Dishmon and John Jason Woodard, were not licensed to sell or offer securities investments.
The company, which has been proven to have no bearing to the state of Massachusetts, also defrauded investors by not letting them in on the regulators, the crypto-market, and the investment-risks associated with the trading of cryptocurrencies.