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April 21, 2023 Coin Telegraph

actor

The regulator is cracking down on high-yield investment products saying the programs raise hype with the promise of high returns before going dark.

A number of firms claiming to offer artificial intelligence (AI) assisted crypto trading services have been hit with allegations of being “fraudulent investment schemes” by a California financial regulator, with two accused of using actors and AI to impersonate CEOs.

On April 19 the California Department of Financial Protection and Innovation (DFPI) issued desist and refrain orders against five entities purporting to use AI to trade crypto assets including Harvest Keeper, Visque Capital, Coinbot, and QuantFund, along with Maxpread Technologies and its CEO Jan Gregory Cerato.

Scammers like to deceive investors by using phony CEOs, sham algorithms, & Ponzi schemes. Today, we've issued desist and refrain orders to five entities/individuals who violated CA securities laws. For more information: https://t.co/gj13z2OE4G #investing #hyip #Cryptonews pic.twitter.com/MXHPYwVIny
— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) April 19, 2023

According to the regulator two of the firms even faked their CEOs. The purported technology firm Maxpread is alleged to have used an AI-generated avatar called “Michael Vanes” to act as CEO and market its products, with the supposed avatar appearing in YouTube promotions.

Harvest Keeper, which claims it's a crypto trading firm, was accused of having hired an actor to play the role of its CEO Markus Peters. The DFPI said Harvest described Peters as being the “leader” and “main generator of ideas.”

According to the DFPI, the entities were taking advantage of the hype surrounding AI to lure in investors with the promise of “incredible returns” by claiming to use the technology to trade crypto assets and — amongst other allegations — use multi-level marketing schemes to reward investors for recruiting others.

“The pitch was simple” the DFPI said, adding:

“Investors were told that if they invested funds, these entities would use their knowledge, skill, experience, and AI to trade crypto assets and generate incredible profits for investors. In each case, these claims are false.”

The DFPI noted the entities “went to great lengths to appear as if they were legitimate businesses” saying they created professional websites, social media accounts and promotions from influencers.

The websites for both Harvest Keeper and Coinbot are down but the websites for the other three firms remain online.

Visque Capital offers a range of investment plans on its website, the most expensive plan claims investors would see returns of up to 3% per day.

*A screenshot from Visque Capital’s website showing their investment plans. Source:* *Visque Capital*.

Based on an initial investment of $50,000, the plan would supposedly give investors a return of around $270,000 after the full 180 days.

The DFPI alleges the schemes would seem to be working well initially, with early withdrawals processed and account balances steadily increasing.

Eventually, however, withdrawals would not be processed and the website would go offline, leaving investors with no way to access their funds.

Cointelegraph contacted Maxspread, Visque and Harvest Keeper for comment but did not immediately receive a response. Coinbot and Quantfund could not be reached for comment.

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California regulators order MyConstant to cease crypto-lending services

December 22, 2022 Coin Telegraph

Blockfi

The California DFPI warned in July that it would be cracking down on crypto interest account providers in the state.

The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending platform MyConstant to cease offering a number of its crypto-related products over alleged state securities law violations.

The DFPI stated in a press release on Dec. 21 that it has ordered MyConstant to “desist and refrain” from offering its peer-to-peer loan brokering service and interest-bearing crypto asset accounts, which it says are in violation of the California Securities Law and California Consumer Financial Protection Law.

The DPFI alleged that MyConstant’s offering and selling of its peer-to-peer lending service called “Loan Matching Service” violates one of the state’s financial codes.

It also alleged that MyConstant engaged in “unlicensed loan brokering,” as the platform induced lenders to lend without proper licenses.

The regulators also had a problem with the crypto lender’s fixed interest-beating crypto asset products, whereby a customer deposits crypto assets (such as stablecoins and fiat) and are promised a fixed annual percentage interest return.

It said that these were examples where MyConstant offered and sold unqualified, non-exempt securities.

In July, the regulator said it was investigating multiple crypto interest account providers to determine whether they are “violating laws under the Department’s jurisdiction.”

DFPI first announced it was investigating MyConstant in a press release on Dec. 5 stating that MyConstant is “not licensed” by DFPI to operate in California.

The recent action comes only a month after the California-based company appeared to have fallen into hard times, announcing on Nov. 17 that “rapidly deteriorating market conditions” prompted heavy withdrawals and that it was “unable to continue to operate our business as usual.”

The platform at the time added that it had limited its business activity, including pausing withdrawals, and that: “No deposit or investment request will be processed at this time.”

The platform has been providing users with updates on its website since then, including an updated plan sent to users on Dec. 15 which includes a financial overview, liquidation schedule, estimated recovery, and next steps.

At the time, the platform said it will continue to administer its crypto-backed loans, including ensuring borrower compliance, processing loan repayments, returning borrowers' collateral (when their loans are paid in full), and liquidating borrowers' collateral in the event of default.

DFPI