The California Department of Financial Protection and Innovation (DFPI) has ordered 11 cryptocurrency companies to cease operations for embezzling customers’ funds and violating securities laws.
by DFPI September 27 In the announcement published on its official website on 11th each of the cryptocurrencies sale of unqualified securities made and among 10 company’s investors material misstatements stated and companies Ordered to cease activities for violating the law.
According to the statement, companies 9 of them from their customers to trade on their behalf requested funds. Another company is Developing the metaverse platform asked its customers for digital assets. Also mentioned in the report of all 11 companies using a ponzi scheme-like reference system where savings from new investors are used to pay off the so-called bonuses of old investors was among the allegations. To support its posi claim, DFPI cited bonuses that companies give to investors who bring in new investors.
Financial authority of all 11 companies “High Return Investment Programs (HYIP)” a type of scam called classic examples claimed to be. HYIPs are generally high return with low risk DFPI, stating that it promises to be promised and gives very little information about the operation of the system, warned investors to be careful against such fraudulent structures.