Texas Regulator Shuts Down Alleged Cryptocurrency Cloud Mining Project

Lina PortmanMay 29, 2024

0 3 minutes read

The Texas State Securities Board has taken action against Arkbit Capital, issuing a cease and desist order for its involvement in alleged fraudulent crypto cloud mining activities. Led by financial examiner Alexis Cantrell, the board's investigation revealed alleged deceptive practices by Arkbit Capital and its associated entities.

Among the charges, Arkbit Capital is accused of using deceptive image and video manipulation tactics to promote its investment offerings. The company, along with its subsidiaries Arkbit Capital Holdings, ABC Holdings LLC and ABC Mining, allegedly misrepresented its operations, claiming they operated Arkansas-based data centers for cryptocurrency.
cloud mining.

Investors were lured by the promise of significant daily returns ranging from 1.6% to 2.8% over a 120-day period on digital asset deposits within a specific range. However, the council's order states that these promises were unfounded.

Additionally, Arkbit Capital reportedly used CoinPayments.Net, a payment processor, to handle transactions related to its investment plans, despite restrictions banning users from certain jurisdictions, including the United States. The account holder linked to Arkbit's CoinPayments account was discovered to be Paras Khivesara, located in Hyderabad, India, rather than Arkansas as reported.

Additionally, the board highlighted instances of manipulated media, including a video showing the company's CEO and founder speaking at a cryptocurrency conference in Austin, Texas. However, no evidence was found to support the presence of Delmar Estabrook or Arkbit Capital at the said event.

Official risks highlighted

In response to these findings, Joe Rotunda, director of the Texas State Securities Board's enforcement division, emphasized the importance of vigilance when encountering investment opportunities on social media.

“This is a common tactic we see in online crypto investment scams. By appearing to be part of the cryptocurrency industry, bad actors attempt to pass themselves off as legitimate contributors to this space. Make no mistake,” Rotunda said.

This incident adds to a series of Ponzi scheme cases involving cryptocurrencies have surfaced in the United States over the past year, reflecting challenges in the digital asset investment landscape.

Official risks highlighted

This incident adds to a series of Ponzi scheme cases involving cryptocurrencies have surfaced in the United States over the past year, reflecting challenges in the digital asset investment landscape.