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Website Operators Warned to Stop Offering Fraudulent Cryptocurrency Investment Opportunities

New Jersey Bureau of Securities Issues Five Orders 

Bulk Investments Order
Forte Trade Limited Order
Dilna Investments Ltd. d/b/a Fidelity Revenue Order
RealBitcore Mining Order
FileFxOption and FileFxOption Limited Order

 NEWARK – Acting Attorney Andrew J. Bruck today announced that the Bureau of Securities has issued five orders to companies touting fraudulent investment opportunities relating to cryptocurrencies, directing them to stop operating in violation of New Jersey law. Consumer News 1

The five summary Cease and Desist Orders issued today describe how the companies collectively have used a variety of tactics common in investment scams to lure investors into their fraudulent cryptocurrency-investment schemes. These include vague promises of profit, bogus client endorsements, limited and misleading disclosures, and failure to identify the company’s principals, among a smokescreen of other fraudulent statements and omissions. None of the entities is registered with the Bureau to offer or sell securities or act as a broker-dealer in New Jersey.

At least three New Jersey investors were scammed by the companies. They ultimately were unable to withdraw any of the purported earnings from the accounts they established with the companies or to recover their original cryptocurrency investments, which together totaled nearly $90,000.

“Online scammers are exploiting the public’s interest in cryptocurrency investment opportunities,” said Acting Attorney General Bruck. “But we’re fighting back. Our Bureau of Securities is holding accountable those attempting to rip off New Jersey investors, and we’ll continue working to protect the residents of our state from scams and frauds.”

“The anonymity and decentralized nature of the virtual currency investment market make it fertile ground for internet scammers,” said Sean P. Neafsey, Acting Director of the Division of Consumer Affairs. “It is imperative that investors do their homework when considering cryptocurrency investments or risk significant financial losses.”

The Bureau found that the online entities covered by today’s orders have been engaging in fraud in connection with the offer and sales of securities on their websites in conduct that collectively includes:

  • omitting material facts to potential investors such as the identity of their principals, how investors funds would be used, and the risks of their investment plans;
  • listing phony addresses for their places of business;
  • falsely claiming to be “registered”, “licensed”, “insured”, or otherwise authorized to sell securities; and
  • posting bogus testimonials from clients that use stock photos and canned statements that appear on multiple cryptocurrency investment websites under different entity names.

In addition, the Bureau found that the entities have been violating New Jersey Securities Laws by offering and selling unregistered securities or by acting as unregistered broker-dealers in New Jersey.

The Bureau found that at least three of the online entities defrauded New Jersey investors out of their funds. They are:

  • Bulk Investments – A New Jersey investor sent to Bulk Investments Bitcoin worth $74,900, for the purchase of securities. Bulk Investments told the investor that in order to withdraw the funds, an additional – and previously undisclosed – 10% tax fee totaling $59,812 was required to be paid up front. Despite requests, the investor has not received any of his principal or profits back from Bulk Investments.
  • Forte Trade Limited – A New Jersey investor made an initial investment of Bitcoin worth $100 in the securities offered by Forte Trade, followed by several other investments for a total of $3,300. When the investor requested to withdraw $243.58 from his Forte Trade account, a representative notified him that he was required to pay a management fee of 20% of the requested withdrawal. The investor was told that the fee would not be deducted from the withdrawal, but was required to be paid as a separate payment and in advance of any distribution. Forte Trade’s website does not disclose a management fee but instead states, “There are no fees or penalties for closing/deleting your account.”
  • Dilna Investments Ltd. d/b/a Fidelity Revenue – A New Jersey investor transferred $11,000 worth of Bitcoin to Fidelity Revenue. Her funds purportedly grew to over $34,000, but when she attempted to withdraw the funds from her account, Fidelity Revenue told her she would be required to pay a 28% fee up front. The investor contacted the online cryptocurrency exchange where she purchased the Bitcoin and attempted to reverse the transfer of her funds to Fidelity Revenue. The cryptocurrency exchange, which is not affiliated with Fidelity Revenue, told her that the funds could not be recovered “unless the receiver decides to send them back” due to “transaction finality,” which “is a function of decentralized blockchains.” The cryptocurrency exchange told the investor that it had “flagged the address where the crypto was sent and will prevent you and additional users from falling victim to this scam.” To date, the investor has not received any of her funds back from Fidelity Revenue despite her requests.

The other entities subject to today’s Cease and Desist Orders are:

  • RealBitcore Mining – RealBitcore Mining’s website vaguely promotes cryptocurrency investment accounts with false claims. The photos associated with purported testimonials on the site are actually stock photos that appear on other websites around the Internet.
  • FileFxOption and FileFxOption Limited – FileFxOption promotes cryptocurrency investment opportunities using some of the same fake testimonials as RealBitcore Mining and offers only vague descriptions of its investment plans or how the money is invested.

“Our actions today are a reminder to investors that the time to investigate a cryptocurrency-related investment is before you hand over your money. Unfortunately, by the time these investors realized the truth about these sham platforms, their investments were gone,” said Christopher W. Gerold, Chief of the Bureau of Securities. “Raising public awareness of crypto-related fraud and the risks associated with this volatile market is a crucial part of the Bureau’s work. An informed investor is the best protection against financial predators trolling the virtual currency market.”

The Bureau’s investigation was handled by Deputy Chief Amy Kopleton and Investigator Dina Venero of the Bureau of Securities, within the Division of Consumer Affairs.

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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.

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