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As Scrutiny Intensifies, California Cracks Down on Cryptocurrency Scams

The BitKeep Exploiter Enticed Users by Using Phishing Sites

As part of its efforts to enforce California securities laws, California’s Department of Financial Protection and Innovation has released desist and refrain orders against 11 entities.

DFPI released a press release alleging that each business “marketed and sold unqualified securities, as well as making numerous misrepresentations and omissions.” According to the DFPI, one of these 11 companies was soliciting crypto assets for building a metaverse, while another claimed to be a decentralized financial platform. Other companies, including Elevate Pass LLC, Pegasus, and Remabit, are alleged to be misleading investors. 

In What Ways Are These Scams Perpetrated?

These businesses employed a Ponzi-like scheme to pay out “profits” to investors. Authorities claim the entities also offered new investor referral programs and commissions for bringing in new investors. In addition, DFPI encourages investors to use social media platforms to encourage others to invest.

In all cases, the organizations offered high and consistent returns with little risk through their “high yield investment programs.” As a result, the department claims they provided little information on who runs the HYIP and used ambiguous language when explaining how and to whom the HYIP is profitable.

Over the past few years, policymakers and authorities have increasingly focused on the crypto market. In August, the Securities and Exchange Commission charged a $300 million crypto pyramid scheme. Recently, the SEC announced that it would increase the number of staff charged with protecting investors from the dangers associated with cryptocurrencies.

U.S. government agencies should double down on enforcement of digital asset legislation, as the Biden administration stated in mid-September. Earlier this year, Joe Biden issued an executive order to ensure digital assets are developed ethically.

The cryptocurrency market surpassed $3 trillion last autumn but has recently plummeted as investors pulled out of riskier assets. On Sept. 16, National Economic Council director Brian Deese argued that cryptocurrency could compromise national security if not adequately regulated.


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