NH says two bankrupt cryptocurrency firms scammed investors

Published: 01/26/2023 15:10:59

Modified: 01/26/2023 15:10:34

New Hampshire is prosecuting two cryptocurrency firms it says owe Granite State residents money, as regulators continue to wrestle over how to oversee digital assets using regulatory and legal systems created for vastly different types of investments .

The Secretary of State’s Bureau of Securities Regulation said Thursday it had filed separate petitions against Voyager Digital Ltd and Celsius Network Inc., accusing them of fraud and the sale of unregistered securities. Both entered Chapter 11 bankruptcy proceedings in New York last summer; the Bureau filed its bankruptcy claims, including the restitution request for New Hampshire investors.

Individuals who have invested in Celsius or Voyager can contact the Bureau of Securities Regulations with questions or concerns on the website.

The basic claim in this case and many others across the country is that the way companies get people to pay for certain digital assets such as types of cryptocurrency makes assets effectively equal securities such as stocks and bonds, and therefore subject to regulations applied to other financial institutions. That’s also the basic allegation underlying the Federal Securities and Exchange Commission’s case against New Hampshire video hosting site LBRY, in which customers bought and sold assets called tokens that could go up or down in value.

Cryptocurrency proponents argue that the nature of assets based on the decentralized technology known as blockchain means that many existing financial laws, which have been built around central authorities such as banks or stock exchanges, shouldn’t be enforced. This problem is still unsolved.

New Hampshire alleges that Voyager offered and sold unregistered securities in the form of purported interest-bearing accounts. “Voyager said investors could get a high return from these deposits and used them to invest in numerous high-risk transactions. However, Voyager has not disclosed the nature of this risk to its investors. The company is not a cryptocurrency broker licensed and compliant with any of the proper regulatory agencies in the US nor publicly traded in the US… defrauded investors by claiming it was a regulated and publicly traded company,” he said wrote the Bureau in a press release.It made similar claims about Celsius.

The Bureau has sought an immediate cease and desist against both companies for fraudulent conduct and securities sales. It also calls for the restitution of any losses incurred by investors, as well as the imposition of fines and a ban on future registration.

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