Texas Regulator Mandates Arkbit Crypto Mining Cease Operations

Texas Regulator Orders Closure of Arkbit Crypto Mining Operation


By Jimmy Aki
Updated: May 29, 2024 at 16:47 EDT
|
Reading Time: 2 minutes


The fraudulent Arkbit cryptocurrency cloud mining operation has been dealt a significant blow by the Texas State Securities Board. On May 28, the board issued a cease and desist order against Arkbit Capital for engaging in deceptive practices and allegedly perpetrating an investment fraud.
According to the order, the Texas State Securities Board, led by Financial Examiner Alexis Cantrell, discovered that Arkbit had falsely claimed to operate data centers in Arkansas for cloud mining various cryptocurrencies.
Fraudulent Cloud Mining Scheme Alleged
Arkbit promised investors daily returns of 1.6% to 2.8% for 120 days on crypto deposits ranging from $50 to $49,999. The operation operated under the names Arkbit Capital, Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining.
The crypto firm allegedly used fake media assets, including a video featuring its CEO, Delmar Estabrook, speaking at a cryptocurrency conference in Austin, Texas.
However, state regulators found no evidence that Estabrook or Arkbit Capital had ever attended the event.
“They were promoting a cryptocurrency cloud mining fraud based on deceit and manipulation,” said Joe Rotunda, Director of the Enforcement Division at the Texas State Securities Board.
The order also revealed that Arkbit processed payments through CoinPayments.Net, despite the processor’s policy prohibiting users from the United States.
The holder of the Arkbit CoinPayments account was traced to an individual in Hyderabad, India, rather than Arkansas as claimed.
These activities by the group are part of a larger trend of alleged crypto Ponzi schemes that regulators are working to shut down.
In March 2024, the U.S. Securities and Exchange Commission (SEC) uncovered a $300 million crypto Ponzi scheme called CryptoFX, which targeted investors from the Latino community. This was followed by the conviction of promoters behind the collapsed IcomTech by a New York jury, as they were found guilty of conspiracy to commit wire fraud.
It is also worth noting that Irina Dilkinska, a former legal executive of the OneCoin fraud scheme, was sentenced to four years in prison in 2019 after pleading guilty to her role in laundering $4 billion in crypto fraud.
Texas Regulators Prioritize Investor Protection
The regulatory action against Arkbit is part of an ongoing effort by the Texas State Securities Board and other state regulators to proactively combat crypto investment fraud and safeguard residents from unscrupulous individuals.
In 2018, the Texas State Securities Board issued an emergency cease and desist order against several individuals and companies based in Utah who were allegedly offering unregistered cryptocurrency mining investments with implausibly high annual returns of 180% to 250%.
Regulators emphasized that such unrealistic returns over short periods of time are typical warning signs of fraudulent schemes.
The respondents were also accused of intentionally withholding basic information and risk warnings from investors regarding the volatility of cryptocurrencies, technical vulnerabilities, regulatory uncertainties, and market competition risks.
“Combating crypto fraud requires a multi-faceted approach that includes aggressive enforcement actions and ongoing investor education campaigns,” said Rotunda. “We cannot allow bad actors to exploit emerging technologies to perpetrate old-school scams.”
Follow Us on Google News