Coinspeaker Texas Securities Board Issues Cease-and-Desist against Arkbit for Scam Investment Scheme
The Texas State Securities Board has issued an Emergency Cease and Desist Order to stop a fraudulent multi-level marketing (MLM) scheme perpetrated by Arkbit. According to the order, Arkbit must stop its investment plans that offer users purported returns from cryptocurrency mining investments. The Arkbit company comprises Arkbit Capital, Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining.
Arkbit’s Payment Processor Account in India
The order states that Arkbit claims to operate data centers in Arkansas, which are used for cloud mining several digital assets. According to Arkbit’s website, the Standard and Comprehensive ROI Plans the company offers advertised daily returns of between 1.6% and 2.8%, for 120 days. This requires an investment deposit of cryptocurrencies worth between $50 and $59,999.
The Texas State Securities Board also found that Arkbit Capital used payment processor CoinPayments.Net to facilitate user investment payments. However, the payment processor’s policy restricts users from the United States and several other jurisdictions. Interestingly, the CoinPayments account holder turned out to be a Paras Khivesara in Hyderabad, India, and not Arkansas.
Texas Securities Board Exposes Arkbit for Doctored Images and Videos
According to the Texas regulator, Arkbit also manipulated several images and videos to promote their offerings. For instance, a video Arkbit Capital used showed the company’s founder and CEO Delma Estabrook at a 2023 cryptocurrency conference held in Austin, Texas. However, authorities could not find any evidence to support Estabrook or Arkbit’s presence at the conference.
Authorities have also found that a video showing Arkbit’s office, supposedly in Little Rock, Arkansas, is actually an office space in Los Angeles anyone can rent as a workspace. To add some credibility to its scheme, Arkbit registered with the Arkansas Secretary of State office as a business entity.
The order exposes Arkbit’s use of social media to drive its scams. The company regularly drives users to its website and investment content using Facebook, LinkedIn, Instagram, and X. There is also a YouTube account Arkbit used to show purported data centers in Arkansas. According to the Texas Securities Board, Akbit used “stolen and edited photos and video” to advertise some credibility. One such YouTube video turned out to be an edited stock video from stock footage website Pond5, of a crypto mining server plant.
Authorities Caution Investors
Texas Securities Commissioner Travis J. Iles has advised investors to adopt “healthy skepticism” when dealing with lucrative investment opportunities advertised by unfamiliar persons. Iles said would-be investors must be aware that methods used by fraudsters are changing, making it more difficult to differentiate legitimate investments from scams.
According to Joe Rotunda, the Director of the Enforcement Division of the Texas State Securities Board, the crypto sector has had its fair share of these scams. Rotunda said:
“This is a common tactic we see in online crypto investment scams. By appearing to be part of the cryptocurrency industry, bad actors attempt to seem like legitimate contributors to the space. Don’t be fooled.”
Last July, the state’s Securities Board issued a Cease and Desist Order against Abra, comprising a few businesses accused of securities fraud. In January, the Board announced a settlement with Abra, allowing investors to withdraw their funds.
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Texas Securities Board Issues Cease-and-Desist against Arkbit for Scam Investment Scheme