In a significant win for investors, five U.S. states have reached a settlement with GS Partners, a European company behind dubious crypto investment schemes.
These schemes, including investments in a Dubai skyscraper, led to substantial losses. As part of the agreement, GS Partners will refund all money invested by clients in these states.
The Scale of the Scheme
First of, GS Partners claimed $1 billion in sales by last September, but investigations by Texas and other states soon followed, leading to action by regulators in 10 U.S. states and one Canadian province.
The company operated a multi-level marketing scheme, promoted by celebrities like Floyd Mayweather, selling dubious crypto investments.
These included virtual land, a gold-backed cryptocurrency, and vouchers for shares in a Dubai skyscraper. Despite promises of income from leasing units, the value of the vouchers plummeted when GS Partners missed its $175 million sales target.
GS Partners Settlement
The settlement with Texas, Alabama, Arizona, Arkansas, and Georgia resolves all civil claims against GS Partners in those states.
As part of the deal, GS Partners will fully refund all investments from clients in these states. Joe Rotunda of the Texas State Securities Board emphasized that securing refunds for investors was the priority.
No financial penalties were imposed, reflecting a focus on protecting consumers. However, this settlement doesn’t prevent other states or federal regulators from pursuing further investigations or legal action against GS Partners and its owner.
Verdict:
This settlement is a major win for investors deceived by GS Partners, as full refunds are rare and offer a better outcome than the partial recoveries typically seen in such cases.
The involvement of celebrities and lofty promises from GS Partners underscores the gravity of the situation. While the settlement brings some relief, Josip Heit and his companies still face potential legal action from other states and federal regulators.
The case underscores the need for robust regulations to protect consumers from similar fraudulent schemes, which often involve multi-level marketing, celebrity endorsements, and exaggerated claims.
Though investors in the settling states can be relieved about getting their money back, the broader fight against financial fraud continues.
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