Texas Regulator Shuts Down Arkbit Crypto Mining Operation
The Texas State Securities Board has taken decisive action against the fraudulent Arkbit cryptocurrency cloud mining operation. On May 28, the board issued a cease and desist order against Arkbit Capital for engaging in deceptive practices and perpetrating an alleged investment fraud.
According to the order, Arkbit falsely claimed to operate data centers in Arkansas for cloud mining various cryptocurrencies. The company promised investors daily returns of 1.6% to 2.8% for 120 days on crypto deposits ranging from $50 to $49,999. Arkbit operated under multiple entities, including Arkbit Capital, Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining.
To deceive investors, Arkbit used fake media assets, such as a video featuring its CEO, Delmar Estabrook, speaking at a cryptocurrency conference in Austin, Texas. However, state regulators found no evidence that Estabrook or Arkbit Capital ever attended the event.
The order also revealed that Arkbit’s payment processing was conducted through CoinPayments.Net, despite the processor’s policy banning users from the United States. The account holder for Arkbit’s CoinPayments account was traced back to an individual in Hyderabad, India, instead of Arkansas as claimed.
This case is part of a larger trend of alleged crypto Ponzi schemes that regulators are actively working to shut down. In March 2024, the U.S. Securities and Exchange Commission (SEC) uncovered a $300 million crypto Ponzi scheme called CryptoFX, which targeted investors from the Latino community. Additionally, promoters behind the collapsed IcomTech were recently convicted of conspiracy to commit wire fraud in New York.
It is clear that Texas regulators are prioritizing investor protection. The action taken against Arkbit is part of an ongoing effort by the Texas State Securities Board and other state regulators to combat crypto investment fraud and safeguard residents from unscrupulous individuals. In the past, the board has issued emergency cease and desist orders against individuals and companies offering unregistered cryptocurrency mining investments with implausibly high annual returns.
Regulators emphasize that outlandish promised returns over short timeframes are red flags of fraudulent offerings. Furthermore, respondents in these cases have been accused of intentionally withholding crucial information and risk warnings from investors regarding the volatility of cryptocurrencies, technical vulnerabilities, regulatory uncertainties, and market competition risks.
Joe Rotunda, Director of the Enforcement Division at the Texas State Securities Board, stated that combating crypto fraud requires both aggressive enforcement actions and ongoing investor education campaigns. The goal is to prevent bad actors from exploiting emerging technologies to perpetrate traditional scams.
Follow Us on Google News
