The State of New Jersey has issued an emergency order halting Bitstrade, a firm that promised “investment profit guaranteed” via cryptocurrency related investment plans.
Bitstrade posts that 960 “happy investors” have used their services. Bitstrade claims to be able to return 10% interest accrued daily if you invested $10,001 or more.
The New Jersey Bureau of Securities found that Bitstrade violated the State’s Uniform Securities Law by offering investors an unregistered security in the form of an investment pool. Bitstrade is not registered to sell securities in New Jersey.
“The Bureau’s action today reinforces our commitment to protecting investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments,” commented NJ Attorney General Gurbir S. Grewal. “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.”
The Bitstrade website offers a “profit calculator” to lure in unsuspecting investors with outlandish claims of investment returns. Investors could participate for as little as $10.00 by backing the investment pool that claimed to be buying Bitcoin.
Bitstrade said their “mission is to empower people financially and make the world more open and connected. This is the community of the people with a common cause to make bitcoin the most used payment system in the world. Our vision is to foster a trusted bitcoin community, more friendly than OTC, but [more] involved than a bitcoin broker.”
Sharon M. Joyce, Acting Director of the NJ Division of Consumer Affairs, said 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.”
Bitstrade claimed to maintain addresses in Redland, California and Scottsdale, Arizona. According to the Bureau, the California address listed on Bitstrade’s website is bogus and simply 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.
“Bitstrade is a prime example of a company seeking to capitalize on the cryptocurrency craze,” said Christopher W. Gerold, Chief of the Bureau of Securities. “Regulators, including the Bureau, are actively responding to fraudulent crypto-cloaked securities offerings.”
The Bitstrade website does not list any names of management or firm founders. A review of WhoIs indicated “Tim Jones,” ostensibly based in Washington, DC, was the registrant of the domain.
The Bitstrade site highlights the risk to unsophisticated investors falling for outrageous claims of investment returns in the crytpocurrency space.
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