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Texas Regulator Orders Arkbit Crypto Mining to Shut Down
Last updated: May 29, 2024 4:47 pm EDT | 2 minutes reading
The Texas State Securities Board severely harmed a fraudulent Arkbit cryptocurrency cloud mining operation with a cease and desist order on May 28 against Arkbit Capital for engaging in deceptive practices to perpetrate an alleged investment fraud.
O order revealed that the Texas State Securities Board, led by financial examiner Alexis Cantrell, uncovered Arkbit’s false claims of operating data centers in Arkansas for cloud mining of various cryptocurrencies.
Arkibt Accused of Cloud Mining Scam
Arkbit falsely promised investors daily returns of 1.6% to 2.8% for 120 days on crypto deposits ranging from $50 to $49,999. Arkbit operated under the entities Arkbit Capital, Arkbit Capital Holdings, ABC Holdings LLC and ABC Mining.
The crypto firm allegedly misled investors using fake media assets, including a fake video of its CEO, Delmar Estabrook, speaking at a cryptocurrency conference in Austin, Texas.
However, state regulators found no evidence that Estabrook or Arkbit Capital participated in the alleged event.
“They were selling a cryptocurrency cloud mining scam based on deception and manipulation,” said Joe Rotunda, Director of the Division of Enforcement at the Texas State Securities Board.
An alleged fraudster posing as a #crypto professional being interviewed in #consensus2022 was named in an execution process on the eve of @coindeskin #consensus2024.
Supposed #cryptomining company #arkbit/#abcmining named in action. See below.
-Joe Rotunda (@joe_rotunda) May 28, 2024
The order further revealed that Arkbit’s payment processing was facilitated through CoinPayments.Net, even though the processor’s policy prohibited users from the United States.
The Arkbit CoinPayments account holder was traced to an individual in Hyderabad, India, not Arkansas as claimed.
The group’s nefarious activities represent a broader trend of alleged crypto Ponzi schemes that regulators are rushing to shut down.
In March 2024, the US Securities and Exchange Commission (SEC) dismantled a $300 million crypto Ponzi scheme called CryptoFX that targeted investors from the Latino community. This was followed by a New York jury convicts prosecutors behind IcomTech collapse as they were found guilty of conspiracy to commit wire fraud.
Also, remember that the former legal executive of the OneCoin fraud scheme Irina Dilkinska was sentenced to four years in prison after pleading guilty to her role in laundering $4 billion in crypto fraud in 2019.
Texas Regulators Prioritizing Investor Protection
The regulatory action on Arkbit is part of an ongoing effort by the Texas State Securities Board and other state regulators to proactively combat crypto investment fraud and protect residents from unscrupulous actors.
Texas Regulator Orders Arkbit Capital to Cease Operations Over Alleged Crypto Scam
The Texas State Securities Board has issued a cease and desist order against crypto miner Arkbit Capital for engaging in fraudulent crypto cloud mining activities, Cointelegraph reported. O…
– CoinNess Global (@CoinnessGL) May 29, 2024
In 2018, the Texas State Securities Board issued an emergency cease and desist order against several Utah-based individuals and companies allegedly offering unregistered cryptocurrency mining investments that promised implausibly high annual returns of 180% to 250%.
Regulators highlighted how such bizarre promised returns in short time frames are typical warning signs of fraudulent offers.
Respondents were also accused of intentionally failing to disclose basic information disclosures and risk warnings to investors about cryptocurrency volatility, technical vulnerabilities, regulatory uncertainties and market competition risks.
“Combating crypto fraud requires a multi-pronged approach of aggressive enforcement actions coupled with persistent investor education campaigns,” Rotunda said. “We cannot allow bad actors to exploit emerging technologies to perpetrate old-school schemes.”