The Texas State Securities Board has issued a cease and desist order against Arkbit Capital, a company falsely claiming to operate cloud mining data centers in Arkansas for various cryptocurrencies. This order comes as part of an ongoing effort to combat fraudulent activities in the cryptocurrency space.
Fraudulent Claims and Deceptive Practices
Led by Financial Examiner Alexis Cantrell, the Texas State Securities Board discovered that Arkbit Capital and its affiliates—Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining—engaged in fraudulent activities. These included the use of deceptive image and video manipulation techniques to promote their investment plans.
Arkbit falsely claimed to operate data centers in Arkansas and promised investors daily returns of 1.6-2.8% for 120 days on digital asset deposits ranging from $50 to $49,999. However, the investigation revealed that these claims were entirely fabricated.
Misleading Payment Processing
The order also exposed that Arkbit Capital used CoinPayments.Net to facilitate payments for their investment plans, despite the platform’s policy restricting users from certain jurisdictions, including the United States. The account holder for Arkbit’s CoinPayments account, Paras Khivesara, was found to be based in Hyderabad, India, not Arkansas.
Fabricated Conference Appearances
One of the manipulated videos used by Arkbit Capital featured a supposed speech by their CEO and founder at a cryptocurrency conference in Austin, Texas. The Texas State Securities Board found no evidence that either Delmar Estabrook or Arkbit Capital were present at the conference.
Also Read: Peak Mining Acquires New 300MW ERCOT-Approved Site in Texas
Public Warning
Joe Rotunda, Director of the Enforcement Division at the Texas State Securities Board, urged the public to remain vigilant when dealing with social media investment opportunities and to thoroughly research any investment before sending money.
Broader Context of Crypto Frauds
This case is one of several Ponzi schemes related to cryptocurrency that have emerged in the United States over the past year. On March 15, the U.S. Securities and Exchange Commission (SEC) busted a $300 million Ponzi scheme under the guise of a crypto trading platform called CryptoFX, which targeted Latino investors in the U.S. Just a few days later, on March 18, a New York jury convicted two individuals promoting the fraudulent crypto mining and trading scheme IcomTech.
Most recently, on April 4, Irina Dilkinska, former head of legal and compliance for the multibillion-dollar OneCoin fraud scheme, received a four-year jail sentence after admitting to her role in laundering millions of dollars.
