The state of New Jersey's Bureau of Securities and the Attorney General has issued a cease and desist order to a digital currency investment fund called 'Bitstrade' this week. According to the state's Attorney General's office, the cryptocurrency-focused firm was "fraudulently" managing and selling securities.
New Jersey Officials Stop a Cryptocurrency Investment Firm from Operating In the State
New Jersey lawmakers have sent a cease and desist letter to a firm called Bitstrade which claims to be a registered U.S. financial startup and offers digital asset banking services. Officials from New Jersey say Bitstrade unlawfully provided investors unregistered securities in the form of a pool that claims to guarantee up to 10 percent returns which accrue daily. Authorities from the Bureau of Securities and Attorney General's office have found that "Bitstrade provides no basis to guarantee investment profit," and "Bitstrade is not registered to sell securities in New Jersey."
"The Bureau's action today reinforces our commitment to protecting investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments," said New Jersey's Attorney General Gurbir Grewal.
We want to make sure that investors tempted to cash in on the cryptocurrency rage aren't being lured into sending funds to an anonymous internet entity without knowing where the funds are going or how they'll be used.
Lawmakers Remind Retail Investors to be Extra Vigilant About Cryptocurrency Investments
Sharon Joyce, Acting Director of the Division of Consumer Affairs (DCA) says Bitstrade's fraudulent offer is more harmful because "cryptocurrency is virtually anonymous, so there is no recourse for investors to recoup their losses." Joyce continues, "We're reminding investors to be extra vigilant about fully vetting what is being sold before investing with cryptocurrency."
The news also follows the recent cease and desist notice sent to a cryptocurrency startup in Texas last month. The Bitstrade investigation was handled by Deputy Bureau Chief Amy Kopleton and Investigator Raymond Marelick of the Bureau of Securities, within the DCA. New Jersey's regulators believe there is a "high risk of fraud" when it comes to cryptocurrencies, and they plan to regulate the digital asset industry more.
"Bitstrade is a prime example of a company seeking to capitalize on the cryptocurrency craze — Regulators, including the Bureau, are actively responding to fraudulent crypto-cloaked securities offerings." Christopher W. Gerold, Chief of the Bureau of Securities concludes.