New Jersey legislators have issued a cease and desist letter to a firm named Bitstrade that is asserting to be a registered U.S. financial startup and offers digital asset banking services.
New Jersey officials are saying that Bitstrade illegally offered investors unregistered securities in the form of a pool that promises up to 10% returns, which accumulate daily.
Authorities from the Bureau of Securities and Attorney General’s office have discovered that “Bitstrade provides no basis to guarantee investment profit,” and “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,” Attorney General Grewal was quoted as saying in a press release.
“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.”
Sharon Joyce, the Acting Director of the Division of Consumer Affairs (DCA) explained that Bitstrade’s “fraudulent” offer is more harmful because “cryptocurrency is virtually anonymous, so there is no recourse for investors to recoup their losses.”
“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,” Joyce said.
“We’re reminding investors to be extra vigilant about fully vetting what is being sold before investing with cryptocurrency,” she added.
The news comes not long after the recent cease and desist order that was sent to a cryptocurrency startup in Texas just last month.
The Bitstrade investigation was conducted by Deputy Bureau Chief Amy Kopleton and Investigator Raymond Marelick of the Bureau of Securities, within the DCA.
New Jersey’s regulators hold the belief there is a “high risk of fraud” when it comes to cryptocurrencies, and they currently have plans to regulate the digital asset industry a little bit more.
“Bitstrade is a prime example of a company seeking to capitalize on the cryptocurrency craze — Regulators, including the Bureau, are actively responding to fraudulent crypto-cloaked securities offerings,” said Christopher W. Gerold, the Chief of the Bureau of Securities.
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