The California Department of Financial Protection and Innovation (DFPI) reached a settlement with the perpetrators of an illegal cryptocurrency investment platform and is urging residents to apply for refunds.
Collectively known as GSPartners, the entities involved in the scheme and the platform’s owner and chairman, Josip Heit, must return all funds, less the value of any withdrawals, deposited by California clients.
“This is an enormous victory for Californians,” DFPI Commissioner KC Mohseni said in a statement. “This settlement ensures that Californians who deposited funds into GSPartners will be made whole, and it holds GSPartners and Heit accountable for violating California law.”
The platform violated multiple state securities laws in California, as well as other states which were involved in an investigation into the matter. The DFPI issued a cease and desist order against GSPartners on Nov. 16, 2023, for offering and selling unqualified securities via its multi-level marketing (MLM) platform.
“Investors were told that this broker was one of the largest in the world, was licensed, regulated, and had a trustworthy reputation, and that purchasing GSPartners’ certificates would give investors exclusive access to this broker’s experience and knowledge,” the DFPI stated in the order. “However, GSPartners’ representations were false. In reality, no such partnership existed, and the purported returns were not being generated by the broker managing and trading GSPartners’ investors’ funds.”
GSPartners consisted of GSB Gold Standard Bank Ltd., Swiss Valorem Bank LTD and GSB Gold Standard Corp. AG, as well as Heit, corporate trainer Bruce Innes Wylde Hughes and the operation’s head of mergers and acquisitions, Dirc Zahlmann.
The company promised investors fixed returns between 2.5 percent and 5 percent every week through its “MetaCertificates” program and claimed to be partnered with a specific forex broker, according to DFPI.
The agency also accused Heit, Hughes, and Zahlmann of making “untrue statements of material fact and material omissions to investors and potential investors,” including:
- falsely representing GSPartners was partnered with a particular forex broker to provide services to investors.
- falsely representing GSPartners was a licensed bank when the “license” was granted by a fictitious regulator.
- using the terms “bank” and “banking” when GSPartners was not licensed to engage in banking in California and that investor funds were not FDIC-insured.
- misrepresenting expected profits and risk of loss.
- failing to disclose that the sale of GSPartners’ securities was not qualified in California.
Californians who deposited funds with GSPartners and its affiliated entities will have until May 22 to submit a claim for a full refund, less the value of any withdrawals. The claims process will be administered by AlixPartners LP and can be submitted via gsbsettlement.com.