TRENTON - Attorney General Matthew J. Platkin, the Division of Consumer Affairs and the Division’s Bureau of Securities Monday urged New Jersey investors to redeem assets invested with GS Partners and associate entities following an agreement resolving a multistate investigation into alleged securities violations by the company.
The settlement requires GSB Gold Standard Corporation AG, a Germany-based company that purports to operate in the fintech and banking industries, and affiliates to return investor funds used to purchase investment products tied to digital assets and metaverse technologies.
“The creators of innovative investment products derived from evolving technologies in the securities market are not exempt from the laws that pertain to traditional securities,” Platkin said in a release. “The settlement in principle announced today demonstrates New Jersey’s continued commitment to protecting New Jersey investors and maintaining the integrity of the state’s securities market by investigating and putting a stop to entities that attempt to skirt our laws through the unlawful sale of investment products tied to new technologies.”
The multistate investigation resolved by the agreement centered on GSB’s alleged violation of securities laws in certain jurisdictions ¬– including New Jersey – through its offer and sale of a variety of crypto-related investments promising lucrative returns. These investments included plots of virtual land and a staking pool in a metaverse called Lydian World; a crypto token staking reward purportedly exchangeable for physical gold; and vouchers purportedly representing tokenized shares of a skyscraper. The investigation also focused on GSB’s sales of certificates wherein purchasers were incentivized through gamification to continue to add more and more principal to their certificates to unlock passive income features, such as the payment of weekly or monthly passive income.
“Investors excited to jump on the bandwagon of cutting-edge investment products are, unfortunately, sometimes easy targets for scammers looking to cash in on that excitement,” Director of the Division of Consumer Affairs Cari Fais said. “Through agreements like this one, we’re raising public awareness of the risks associated with investment opportunities that use the latest technology and promises of high returns to entice investors.”
As part of the agreement, GSB agreed to cease and desist offering, selling or renewing any security in New Jersey without first complying with registration or exemption requirements and to return to New Jersey residents the full amount of all monies and cryptocurrencies invested in or deposited with them.
“This agreement, in effect, is designed to make New Jersey investors whole,” Bureau Chief Elizabeth M. Harris said. “Anyone who purchased products or services from the GSB is strongly encouraged to take advantage of this opportunity to reclaim their investment funds.”
New Jersey residents will be eligible to receive the value of their investments or deposits, less the value of any withdrawals. The settlement applies to all products and services sold by GSB, so long as the investments that were purchased from the entities or transactions made on the behalf of investors can be substantiated.
The claims process is expected to begin in early November and is being administered by AlixPartners, LLP. Refunds paid to investors will not be reduced to cover the costs and expenses of the work done by AlixPartners. Additional information about the settlement can be viewed on AlixPartners’ website https://gsbsettlement.com.
The settlement requires GSB to notify investors to withdraw or liquidate assets on its platforms and provide them with information on how to do that. Upon the fulfillment of withdrawals of all assets belonging to, and claims by, New Jersey clients under the established claims process, and the fulfilment of all other settlement terms, GSB will enter into a consent order unregistered securities to New Jersey residents in violation of the securities laws.
The Bureau’s investigation was handled by Deputy Bureau Chief Amy Kopleton, Supervising Investigator Jude Tanella, Investigator Tom Andreopoulos, and Investigator Richard Pearsall of the Enforcement Unit of the Bureau of Securities, within the Division of Consumer Affairs.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors "Check Before You Invest." Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau's website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments.
