A multi-level marketing scam that sold digital certificates in a Dubai skyscraper and
metaverse plots has drawn the ire of regulators in Texas, Alabama, and California.
The regulators have cracked down on a network of companies under the GSB Group, including GSB Gold Standard Bank, GSB Gold Standard Corporation AG, and GS Smart Finance, over fraud, misleading investors, violating securities laws, and causing “irreparable public harm.”
In its legal action, the Texas State Securities Board (TSSB) alleged that the fraudulent companies are controlled by Josip Dortmund Heit and operate from Germany. TSSB also names international consultants Dirc Zalhmann and Bruce Innes Wylde Hughes as respondents.
GSB Group, through its many affiliated companies, allegedly sold ‘certificates’ to customers, purportedly representing ownership in the company’s metaverse. The certificates went for close to $10, and the company had a stated goal of raising $175 million.
However, it was unable to hit its target, and the price of the certificates crashed to less than $0.0000049 on decentralized exchanges.
In another scam, the company sold digital tokens to raise money to build a 36-storey G999 Tower in Dubai that it claimed would “radiate majesty as it shines under the burning sun.”
Yet another scam involved selling G999 tokens that the promoters claimed could be staked or exchanged with physical gold coins.
The scam network relied on social media marketing, YouTube videos, live promotional events, and multi-level marketing schemes to attract investors. It also paid celebrities for promotion, with TSSB revealing that legendary boxer Floyd Mayweather Jr. and Brazilian football great Roberto Carlos were paid to promote the network. For the former, this isn’t the first time he has promoted a digital asset scam.
“Technology changes, but the rules remain the same,” commented TSSB’s Securities Commissioner Travis J. Iles.
In its filing, the California Department of Financial Protection and Innovation ordered the network to “desist and refrain from the further offer or sale of securities in California, including but not limited to investment contracts known as Certificates, unless and until the qualification requirements of the CSL have been met.”
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