California Cracks Down Against 11 Crypto Companies

A crackdown was launched by the Department of Financial Protection and Innovation (DFPI) in California against 11 crypto firms that are believed to be in violation of California’s securities laws.

Reports indicate that nine of the companies had solicited funds from investors for trading cryptocurrencies on their behalf.

One of the companies that have been accused had presented an alleged metaverse software development project, while another one advertised itself as a decentralized finance (DeFi) platform.

Crypto companies

The financial regulator in California has been targeting crypto companies operating in the state and on Tuesday, the DFPI cracked down on almost a dozen crypto-centric firms.

On September 27th, the financial watchdog announced that it had issued desist and refrain orders against eleven companies that were violating the securities laws in California.

According to the regulator, these entities have been accused of running a Ponzi or pyramid scheme.

The press release from the DFPI said that the entities had used the funds for paying purported profits to other investors in the same way as that a Ponzi scheme.

It was also added that a referral program was also offered by the entities in question and it operated in the same way as a pyramid scheme.

Investors were promised a commission in return for the recruitment of new investors and more commissions if those they recruited also recruited others.

Nexo action

The crackdown by the DFPI comes after cease and desist orders had also been sent to another crypto-centric firm, Nexo on Monday.

The crypto lender has been accused of selling unregistered securities via its EIP (Earn Interest Product) accounts that it has been operating since June 2020.

As for the 11 entities that had been sent desist and refrain orders on Tuesday, these entities had been operating in the same manner as high yield investment programs (HYIPs).

The companies that have been sent these orders are Elevate Pass LLC, Pegasus, Cryptos OTC Trading Platform Limited, Remabit, Greencorp Investment LLC, Sity Trade, Polinur ME Limited, Vexam Limited, Metafiyielders Pty Ltd, World Over the Counter Limited and Sytrex Trade.


Clothilde Hewlett, the commissioner of the DFPI, made the announcement on Tuesday about the actions that had been taken against the crypto companies that were accused of running a Ponzi scheme.

Hewlett said that the regulatory authority would continue to offer protection to investors and consumers in California from crypto frauds and scams.

He said that taking these actions not only helped them in protecting Californian consumers but also ensured that the state remains the premier global location for establishing crypto asset companies and for their growth and expansion.

The Californian authority is not the only one that has taken action against crypto companies of late. Regulators in numerous states have become very active in this regard.

This is because the number of crypto companies is increasing and consumers need to be protected from the frauds that can occur in this space.

By Brandon Craig
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