Following the fallout from fraudulent Ponzi-scheme Bitconnect’s demise, New Jersey has officially ordered cryptocurrency investment entity Bitstrade to stop offering unregistered and fraudulent securities in the state.
New Jersey regulators have uncovered yet another fraudulent cryptocurrency investment company.
The announcement comes by way of Attorney General Gurbir S. Grewal and the Division of Consumer Affairs and has been ordered by the Bureau of Securities after an investigation found Bitstrade to be in violation of New Jersey’s Uniform Securities Law.
Bitstrade was found to have sold unregistered securities while guaranteeing upwards of 10 percent daily returns, despite lacking a proper registration to sell securities in New Jersey.
Bitstrade also failed to disclose what have been deemed “key material facts” to prospective investors, including an official address, the names of its executive officers, the company’s financial status, potential risks to investors, and how investors’ money is used. Attorney General Grewal stated:
The Bureau’s action today reinforces our commitment to protecting investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments. We want to make sure that investors tempted to cash in on the cryptocurrency rage aren’t being lured into sending funds to an anonymous internet entity without knowing where the funds are going or how they’ll be used.
A visit to Bitstrade’s official website indicates that all signs indeed lead to a Ponzi scheme.
The company claims to be registered in the United States and purports to guarantee “outstanding returns” by “working as an investment pool, collecting multiple lower value investments and grouping them into one single HUGE investment, using those funds to trade on the stock market”—without any actual information as to how they use investors money.
If it sounds too good to be true, it probably is. According to Sharon M. Joyce, Acting Director of the Division of Consumer Affairs:
What makes Bitstrade’s fraudulent offer potentially more harmful for unsophisticated investors is that cryptocurrency is virtually anonymous, so there is no recourse for investors to recoup their losses. We’re reminding investors to be extra vigilant about fully vetting what is being sold before investing with cryptocurrency.
The Bureau additionally found Bitstrade’s Redland, California and Scottsdale, Arizona addresses to be falsified.
According to Christopher W. Gerold, Chief of the Bureau of Securities, “Bitstrade is a prime example of a company seeking to capitalize on the cryptocurrency craze. Regulators, including the Bureau, are actively responding to fraudulent crypto-cloaked securities offerings.”
Bitstrade requires purchases be made with Bitcoin.
Do you think Bitstrade is a Ponzi scheme? Do you agree that state regulators should actively try to prevent individuals from investing in fraudulent companies? Let us know in the comments below!
Images courtesy of Bitcoinist archives.