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Ruholamin Haqshanas
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Ruholamin Haqshanas
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GS Partners, a company that offered a range of crypto investments, has agreed to fully refund investors as part of a settlement with five U.S. states.
The Texas State Securities Board (TSSB) announced on Monday that Texas, Alabama, Arizona, Arkansas, and Georgia have reached an agreement with the firm and its owner, Josip Heit.
The settlement follows a multi-jurisdictional investigation that found GS Partners had defrauded investors through misleading claims about potential profits and risks associated with its crypto asset investments.
GS Partners to Return 100% of Customer Funds
Under the terms of the agreement, GS Partners will return 100% of the funds to investors in exchange for the dropping of all civil claims and investigations against the company.
Notably, no monetary penalties were imposed on GS Partners or Heit.
The company has also agreed to cease offering unregistered securities in the states involved.
The case dates back to enforcement actions filed in November 2023, in which state regulators accused GS Partners of misrepresenting key information to investors.
The company had sold investments in tokenized shares of a Dubai skyscraper and a virtual real estate metaverse project called “Lydian World,” which promised returns of up to 5% per week.
However, GS Partners failed to meet its fundraising target of $175 million, leading to significant financial losses for its investors.
In a press release, Heit expressed support for the settlement and reaffirmed his commitment to refunding all eligible investors through a formal claims process.
He emphasized that the company’s priority is to protect its reputation and customers.
According to Heit’s legal team, other U.S. states may also join the settlement under similar terms, expanding the scope of investor refunds beyond the five states currently involved.
SEC Crypto Fines Spike
The United States Securities and Exchange Commission (SEC) has levied nearly $4.7 billion in enforcement actions against cryptocurrency firms and executives in 2024, marking an increase of over 3,000% compared to 2023.
The surge was primarily driven by a significant $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, in June, which the SEC called its “largest enforcement action to date,” according to a report from Social Capital Markets on September 9.
In 2024, the SEC carried out 11 enforcement actions, yielding a 3,018% rise from the $150.3 million in penalties imposed in 2023, despite conducting 19 fewer cases.
The total fines, which included forfeiture, disgorgement, civil penalties, settlements, and prejudgment interest, were measured from the initiation of the enforcement actions.
In 2019, the SEC imposed a $1.24 billion action against Telegram, which included $18.5 million in civil penalties and $1.2 billion in disgorgement returned to investors.
Social Capital Markets noted that this case significantly influenced the nearly 2,000% year-on-year increase in the average fine, pushing it to over $70 million in 2019.
From 2020 to 2023, the average fine ranged between $5 million and $35.2 million, but the Terraform Labs case in 2024 pushed the average fine to over $420 million.
Among other cases, GTV Media Group, Ripple Labs, and fraudsters John and Tina Barksdale faced enforcement actions exceeding $100 million.
