GSB Group Settles for $1 Billion in Major Crypto Fraud Case

State regulators secure full refunds for over 800,000 investors across 12 U.S. states.

In a landmark settlement announced on September 9, 2024, the Texas State Securities Board has reached a $1 billion agreement with GSB Gold Standard Corporation AG and its affiliates, collectively known as GSB Group. The settlement guarantees full refunds to more than 800,000 investors across 12 states who invested in a variety of crypto-related products offered by GSB.

The investigation into GSB Group, led by Texas and supported by regulators from Alabama, Arizona, Arkansas, Georgia, and several other states, began in October 2023. The inquiry focused on allegations of illegal offerings related to GSB's digital products, including the G999 token (linked to physical gold), XLT Vouchers (representing ownership in a skyscraper), and investments in the Lydian World metaverse staking pool. The probe quickly led to enforcement actions halting GSB’s alleged fraudulent activities.

As part of the settlement, full refunds are guaranteed for all investors who deposited funds into GSB Group's various products. The refunds will cover the value of their deposits, minus any withdrawals made. Notably, this covers a broad range of investments, from digital tokens to staking pools and gamified investment products like the Elemental and Success Series Certificates.

Texas Securities Commissioner Travis J. Iles emphasized the need for investor vigilance in the burgeoning digital asset market, warning, "Investors should not take flashy graphics, professional videos, or the use of sophisticated terminology as a badge of legitimacy."

To manage the refund process, AlixPartners LP, a firm known for its role in high-profile cases like Bernie Madoff and FTX, has been appointed as the claims administrator. Importantly, AlixPartners’ fees will be covered by GSB Group, ensuring that investors receive full refunds without deductions for administrative costs.

The settlement will be implemented in two stages: first, refunds will be distributed to eligible investors, followed by GSB Group and its owner, Josip Heit, consenting to an enforcement order acknowledging the illegal offer and sale of unregistered securities.

The settlement underscores the growing vigilance of state regulators in addressing complex crypto fraud cases, with Enforcement Director Rotunda advising investors to be wary of misinformation and to verify any claims they receive independently.

photo source / Blockonome