The Texas Securities Commission has taken action against Arkbit Capital, issuing a cease and desist order for its alleged involvement in fraudulent crypto-cloud mining activities. The Commission's investigation, led by Financial Examiner Alexis Cantrell, uncovered alleged fraudulent behavior by Arkbit Capital and its affiliated entities.

Allegations of Fraudulent Conduct

In these allegations, Arkbit Capital is accused of using deceptive image and video manipulation tactics to promote its investment products. The company and its affiliates, Arkbit Capital Holdings, ABC Holdings LLC and ABC Mining, allegedly misrepresented their operations by claiming to operate a cryptocurrency data center, Cloud Mining, in Arkansas.

Investors were lured by promises of huge returns ranging from 1.6% to 2.8% per day on a specific range of digital asset deposits over a 120-day period. However, the Commission's order asserts that these promises were unfounded.

In addition, Arkbit Capital allegedly used the payment processor CoinPayments.Net to process transactions in its investment program, despite the fact that users are prohibited from using it in certain jurisdictions, including the United States. The account holder associated with Arkbit's CoinPayments account was found to be Paras Khivesara, located in Hyderabad, India, and not Arkansas as claimed.

In addition, the board highlighted examples of media manipulation, including a video of the company's CEO and founder allegedly speaking at a cryptocurrency conference in Austin, Texas. However, there is no evidence that Delmar Estabrook or Arkbit Capital were present at the said event.

Officials Emphasize Risks

In response to these findings, Joe Rotunda, director of the Texas Securities Commission's Enforcement Division, emphasized the importance of remaining vigilant when encountering social media investment opportunities.

“This is a common tactic we see in online cryptocurrency investment scams. By pretending to be part of the cryptocurrency industry, the bad guys try to make themselves look like legitimate contributors to the space. Don't be fooled,” Rotunda said.

This incident adds to a series of Ponzi schemes The cases involving cryptocurrencies that have emerged in the U.S. over the past year reflect the challenges facing the digital asset investment space.