California Launches Crackdown on 11 Crypto Firms Accused of Running Ponzi Schemes – Bitcoin News Regulation


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 firms reportedly solicited funds from investors to trade cryptocurrencies on behalf of clients. One of the accused companies put forward an alleged metaverse software development scheme, while the other firm claimed to be a “decentralized financial (defi) platform”.

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

California’s financial regulator DFPI is targeting cryptocurrency companies, and on Tuesday the financial watchdog launched a “crackdown” on dozens of digital currency-focused entities. DFPI “has issued cease and desist orders against 11 different entities for violating California securities laws,” the regulator said on September 27. The state regulator later noted that the operations were accused of running a pyramid or Ponzi scheme.

California has launched a crackdown on 11 crypto firms accused of running Ponzi schemes

The DFPI press release states that “all of the entities used investor funds to pay supposed profits to other investors in a Ponzi scheme.” β€œIn addition, each of the institutions had a referral program that operated as a pyramid scheme. Enterprises promised to pay investors a commission if they attract new investors, and additional commissions if the investors they attract in turn attract new investors.

The DFPI raid follows a cease and desist order it sent to cryptocurrency lender Nexo on Monday. Nexo is accused of offering and selling “opaque securities in the form of Earned Interest Product accounts” since “at least June 2020,” the regulator’s complaint details. The 11 cease-and-desist orders issued Tuesday detail that the institutions allegedly offered “classic examples of high-yield investment programs (HYIPs).” The 11 cryptocurrency companies named in the cease and desist orders 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
  • Polynur ME Limited
  • Remabit
  • City Trading
  • Sytrex Trading
  • Vexam Limited
  • World Over the Counter Limited d/b/a World OTC

During the announcement on Tuesday, DFPI Commissioner Clothilde 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 fraud and scams,” Hewlett said. “These actions not only protect consumers, but also ensure that California remains a key global location for responsible cryptocurrency companies to start and grow,” the commissioner added.

Tags in this story

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

Jamie Redman

Jamie Redman is Head of News at Bitcoin.com News and a fintech journalist based 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 more than 6,000 articles for Bitcoin.com News about disruptive protocols emerging today.




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