The Texas State Securities Board issued a cease and desist order against Arkbit Capital for engaging in fraudulent crypto mining activities. According to the decision led by Financial Examiner Alexis Cantrell, the Texas State Securities Board found that Arkbit Capital and its affiliates engaged in fraudulent activities, including the use of deceptive image and video manipulation techniques to promote their investment plans.
Notable Allegations Against the Mining Company
Arkbit Capital, Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining falsely claimed to operate Arkansas-based data centers for the cloud mining of various cryptocurrencies. They offered investments promising daily returns of 1.6-2.8% for crypto asset deposits ranging from $50 to $49,999 over 120 days.
The decision also alleges that Arkbit Capital used a payment processor called CoinPayments Net to facilitate payments for their investment plans, despite CoinPayments Net’s policy of restricting users in certain regions, including the United States.
It was found that the owner of the Arkbit CoinPayments account was Paras Khivesara, located in Hyderabad, India, not Arkansas. One of the manipulated videos used by Arkbit Capital showed its CEO and founder speaking at a cryptocurrency conference in Austin, Texas. However, the Texas State Securities Board found no evidence that Delmar Estabrook or Arkbit Capital attended the conference.
Details on the Process
Through Enforcement Division Director Joe Rotunda, the Texas State Securities Board urges the public to be cautious when dealing with social media investment opportunities and to thoroughly research any investment before sending money. This is one of several cryptocurrency-related Ponzi scheme cases that emerged in the United States last year.
On March 15, the U.S. Securities and Exchange Commission dismantled a $300 million Ponzi scheme targeting crypto investors from the Latin community in the U.S. under the guise of a crypto trading platform called CryptoFX. A few days later, on March 18, a New York jury convicted two individuals acting as promoters of the now-defunct fraudulent crypto mining and IcomTech.
Finally, on April 4, Irina Dilkinska, the former head of legal and compliance for the multi-billion dollar OneCoin fraud scheme, was sentenced to four years in prison after admitting her role in laundering millions of dollars.
