New Jersey regulator issues emergency order against cryptocurrency scheme Bitstrade

Finance Feeds 1

Finance Feeds / Finance Feeds 1 27 Views 0

FinanceFeeds -

United States authorities continue their fight against cryptocurrency scams, with the latest example provided by the New Jersey Bureau of Securities. In an announcement dated February 9, 2018, the regulator said it had issued an emergency order to stop Bitstrade, an online cryptocurrency-related investment entity, from fraudulently offering unregistered securities in New Jersey.

In a Summary Cease and Desist Order, the Bureau said that Bitstrade is violating the State’s Uniform Securities Law by offering investors an unregistered security in the form of an investment pool. The company promoted the investment by claiming guaranteed returns of up to 10% which accrue daily on investor funds. The Bureau notes that Bitstrade is not registered to sell securities in New Jersey.

Bitstrade has been found to have further violated the law by failing to disclose key material facts to prospective investors, including the names of its executive officers, the address of its principal office, information about Bitstrade’s financial condition, the risks of the Bitstrade Investment, and how Bitstrade invests investors’ money.

The website offers the public an opportunity to invest in the “Bitstrade Investment,” described as an investment pool whereby it collects “multiple lower value investments and grouping them into one single HUGE investment using those funds to trade on the stock market, and generate outstanding returns.” Bitstrade claims to “share back a portion of our revenue” to investors. Bitstrade provides no basis to guarantee investment profit, the Bureau found. Bitstrade offers investments for as little as $10, requiring purchases to be made using Bitcoin.

In addition, Bitstrade’s website says the company maintains addresses in Redland, California and Scottsdale, Arizona. According to the Bureau, the California address listed on Bitstrade’s website does not exist. The Arizona address listed is the headquarters of an unrelated, publicly-traded Internet domain registrar and web hosting company, the Bureau found.

“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,” said Sharon M. Joyce, Acting Director of the Division of Consumer Affairs. “We’re reminding investors to be extra vigilant about fully vetting what is being sold before investing with cryptocurrency.”

The New Jersey regulator refers to a survey of state and provincial securities regulators conducted by the North American Securities Administrators Association (NASAA), of which the Bureau of Securities is a member. The survey has shown that 94% of the respondents believe there is a “high risk of fraud” involving cryptocurrencies. Regulators also were unanimous in their view that more regulation is needed for cryptocurrency to provide better investor protection.

The action by the New Jersey Bureau of Securities is announced about a week after the Texas Securities Commissioner entered an Emergency Cease and Desist Order against DavorCoin, an entity offering investments in a cryptocurrency lending program in Texas.

The post New Jersey regulator issues emergency order against cryptocurrency scheme Bitstrade appeared first on FinanceFeeds.