The Texas State Securities Board has issued a cease and desist order against Arkbit Capital, citing the company’s involvement in deceptive crypto mining operations. Led by Financial Examiner Alexis Cantrell, the investigation revealed that Arkbit Capital, along with its affiliates, utilized misleading image and video manipulation techniques to market their investment schemes.
What Are the Allegations Against Arkbit?
Arkbit Capital and its subsidiaries, including Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining, falsely advertised the operation of data centers in Arkansas for cloud mining various cryptocurrencies. They enticed investors with promises of daily returns between 1.6% and 2.8% on deposits ranging from $50 to $49,999 over a 120-day period.
The order also exposes Arkbit Capital’s use of CoinPayments Net for processing investments, despite the platform’s regional restrictions, including in the United States. It was discovered that the account linked to these payments was managed by Paras Khivesara in Hyderabad, India, not Arkansas as claimed.
How Was the Fraud Uncovered?
One manipulated video depicted Arkbit Capital’s CEO speaking at a cryptocurrency conference in Austin, Texas. However, the Texas State Securities Board found no records of Delmar Estabrook or Arkbit Capital’s attendance, further proving the deceptive nature of their promotional materials.
Key Takeaways for Investors
- Be wary of investment opportunities promoted on social media.
- Thoroughly investigate any company before committing funds.
- Check the legitimacy of companies claiming high returns with minimal risk.
The Texas State Securities Board, through Enforcement Division Director Joe Rotunda, warns the public to exercise caution with social media investment deals and conduct thorough research before committing money. This warning comes on the heels of several cryptocurrency-related Ponzi schemes that surfaced in the United States last year.
On March 15, the U.S. Securities and Exchange Commission dismantled a $300 million Ponzi scheme targeting Latin crypto investors in the U.S. under the guise of CryptoFX. Similarly, on March 18, a New York jury convicted two individuals promoting the fraudulent crypto mining operation IcomTech.
Finally, on April 4, Irina Dilkinska, former head of legal and compliance for the multi-billion dollar OneCoin fraud, was sentenced to four years in prison for her role in laundering millions of dollars.