Crypto: California launches crackdown on crypto scams as scrutiny intensifies

Californias Department of Financial Protection and Innovation, or DFPI, announced on Tuesday that it had issued desist and refrain orders against 11 entities for violations of California securities laws.

Each entity allegedly offered and sold unqualified securities and 10 of them also made material misrepresentations and omissions to investors, according to a press statement from the DFPI. Of the 11 entities, one was developing a metaverse software by soliciting crypto assets, and another claimed to be a decentralized finance platform, the DFPI said. The remaining entities, which include names like Elevate Pass LLC, Pegasus, and Remabit, allegedly misled investors. Vexam Ltd and Elevate Pass LLC didnt respond to requests for comment. The other entities couldnt be reached for comment.

All the entities were alleged to have used a Ponzi-like scheme in which they used investor funds to pay profits to other investors. The entities also had referral programs that worked like a pyramid scheme, authorities said, where investors were promised commissions if they recruited new investors, and additional commissions if the investors that were recruited also recruited new investors. The programs worked to motivate investors to create and post content on social-media websites to entice others to invest, said a press statement from the DFPI.