State Regulators Reach $1 Billion Settlement with GSB Group, Securing Full Refunds for Crypto Investors

TLDR:

• Texas State Securities Board settles with GSB Gold Standard Corporation AG and affiliates
• Full refunds guaranteed for Texas investors in GSB Group products
• Settlement covers G999 token, XLT Vouchers, and Lydian World metaverse investments
• AlixPartners LP to administer claims process at no cost to investors
• 12 US states participating in $1 billion settlement affecting over 800,000 investors

On September 9, 2024, the Texas State Securities Board announced a settlement with GSB Gold Standard Corporation AG and its affiliates, collectively known as GSB Group.

The settlement, valued at $1 billion, addresses alleged illegal crypto offerings and guarantees full refunds for investors across multiple states.

The investigation into GSB Group began in October 2023, led by a coalition of state and provincial securities regulators from Texas, Alabama, Arizona, Arkansas, and Georgia.

Within just four weeks, enforcement actions were initiated to halt allegedly illegal offers and sales in their jurisdictions.

The settlement covers a range of products and services offered by GSB Group, including the G999 token (a digital asset tied to physical gold), XLT Vouchers (representing ownership interests in a skyscraper), and investments in a staking pool within the Lydian World metaverse.

It addresses the sale of Elemental and Success Series Certificates, which allegedly used gamification to encourage investors to increase their investments.

Texas Securities Commissioner Travis J. Iles emphasized the importance of investor caution, stating,

“Investors should not take flashy graphics, professional videos, or the use of sophisticated terminology as a badge of legitimacy. We encourage all retail investors to work with their state securities regulator and investigate before they invest.”

A key feature of the settlement is the guarantee of full refunds for investors. Residents of Texas and other participating states who deposited funds with GSB Group will be eligible to receive the value of their deposits, minus any withdrawals. This applies to all products and services sold by the respondents.

To manage the claims process, AlixPartners LP has been appointed. The firm, known for its work on high-profile cases such as Bernie Madoff and FTX, will administer the refunds at no cost to the investors.

The settlement requires GSB Group to cover AlixPartners’ expenses, ensuring that refunds to eligible clients will not be reduced.

The settlement is being implemented in two phases. The first priority is returning deposits to eligible clients through AlixPartners. Following this, GSB Group and its alleged owner, Josip Heit, will consent to an enforcement order acknowledging the illegal offer and sale of unregistered securities.

According to the North American Securities Administrators Association (NASAA), 12 US states are participating in this settlement, which affects over 800,000 investors.

The coordinated effort among state regulators demonstrates a united front in addressing complex cases involving digital assets and emerging technologies.

Enforcement Director Rotunda cautioned investors about potential misinformation, advising,

“Clients receiving contradictory information from marketers should independently verify the representations before acting upon them.”

He encouraged Texas residents to contact the Enforcement Division of the Texas State Securities Board for verification of any information they receive.

The Texas State Securities Board is now preparing to notify clients and coordinate with AlixPartners on the claims process. Texans who deposited funds or digital assets with GSB Group are urged to contact the agency’s Enforcement Division at [email protected] to begin preparations for the claims process.