New Jersey’s Securities Bureau Shuts Down Fraudulent Bitcoin Investment PlatformFeb 12, 2018 at 14:50
Bitcoin investment platform, Bitstrade was served with a cease-and-desist letter by the New Jersey Bureau of Securities for allegedly selling fraudulent unregistered securities in the state.
The office which is a division of the state’s attorney general, AG Gurbir Grewal sent the document citing that the company is in violation of New Jersey’s Uniform Securities Law for pooling investments and promising returns of 10 percent, accruing daily.
It can be noted that the bureau’s response came after a meeting among federal lawmakers to discuss the crafting of a regulatory framework for cryptocurrencies.
“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,” the state’s securities bureau chief, Christopher Gerold expressed in a statement.
Bitstrade takes payments in bitcoin and claims nearly 1,000 investors across more than $802,000 total invested. The company also has minimum and maximum investment allocations of $10 and $100,000, respectively.
Likewise, the bureau also mentioned that Bitstrade runs an investment pool that combines small allocations from members and redirects the funds into what the company describes as a single huge investment.
The officials also explained that Bitstrade isn’t registered to sell securities in the state of New Jersey and lacks transparency on its management team, its headquarters, health of its balance sheet, risks associated with the pooled investments and the securities where investors are exposed.
The New Jersey bureau also exposed that Bitstrade fabricated its information on its website that it is headquartered in either Redlands, California or Scottsdale, Arizona.
The state’s approach imitated actions taken by Texas regulators against Bitconnect, another virtual currency investment platform that was shut down earlier due to similar promises of fixed returns to investors.