Crypto platform GS Partners has announced a 100% refund to investors after discussions with five US states to avoid further court cases and lawsuits.
GS Partners' Legal Troubles
The marketing platform, accused of fraud, fell short of its fundraising target for a Dubai skyscraper project, leading to significant investor losses. Starting in mid-November 2023, regulators from 10 US states and one Canadian province accused GS Partners and its CEO, Josip Heit, of fraud and ordered an immediate halt to the company's securities sales.
Settlement with Five US States
This move followed the company’s pursuit of several investments, most notably the Dubai skyscraper project. The venture included virtual land plots and a staking pool within the 'Lydian World' metaverse, tied to a gold-backed crypto token representing tokenized shares of the skyscraper. However, the company’s promised returns up to 5% weekly quickly collapsed when it failed to raise the required $175 million. Investors who had committed funds to the project experienced substantial losses and later filed complaints, accusing GS Partners of misrepresenting crucial details about the skyscraper investment. Despite its serious legal setbacks, the company signed a settlement agreement with five US states—Texas, Alabama, Arizona, Arkansas, and Georgia.
Comment from Texas State Securities Board
The Texas State Securities Board led the investigation and subsequent settlement. Joe Rotunda, enforcement director at the Texas State Securities Board, highlighted the rarity of an institution offering full financial relief to investors instead of partial restitution. He emphasized that the goal was to recover investor funds, expressing concern about the potential diversion of assets toward state penalties. Consequently, he was pleased to waive fraud allegations in exchange for returning 100% of client deposits. He anticipated that the claims process, overseen by AlixPartners LP, would start in October and continue for 90 days, with Heit and his companies covering AlixPartners’ fees as part of the settlement. Rotunda added that even with expedited proceedings, the case likely wouldn’t reach the court evidence stage before clients received their asset returns.
Thus, GS Partners has taken steps to refund investors to settle its legal situation, ensuring payments and protecting its clients.
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