Securities regulators from 12 U.S. states have reached a settlement to reimburse investors who lost money in a scheme involving the Lydian.World metaverse, cryptocurrency, and tokenized ownership of a metaverse skyscraper.
The North American Securities Administrators Association (NASAA) announced that regulators have secured a settlement with a group of German companies associated with Josip Heit, collectively known as the GSB Group.
Under the terms of the settlement, GSB Group will return all money and cryptocurrency deposited by U.S. investors. The settlement covers investors in Alabama, Arizona, Arkansas, California, Georgia, Kentucky, Mississippi, New Hampshire, Texas, Utah, Washington, and Wisconsin.
The NASAA and the British Columbia Securities Commission in Canada began enforcement actions against GSB Group in November, describing the venture as a multilevel marketing (MLM) scheme.
Bloomberg reported that GSB Group froze investor withdrawals in October, affecting “hundreds of thousands” of investors in the U.S. and Canada.
Joe Rotunda, Texas State Securities Board enforcement director and NASAA vice chairman, said, “We have negotiated a settlement that will ensure that all clients in any state or province that join the settlement receive 100% of their deposits, less any withdrawals.”
Investors have 90 days to file a claim to recover their funds. The German group, which claims to have over 800,000 investors from more than 170 countries, stated that transactions in the scheme were worth nearly $1 billion.
Regulatory actions against GS Partners
California, Texas, and several other U.S. states took enforcement actions against GS Partners back in November 2023, accusing the firm of defrauding cryptocurrency investors through schemes involving unregistered digital assets.
State regulators allege that GS Partners, along with affiliated entities like GSB Gold Standard Bank Ltd., Swiss Valorem Bank Ltd., and GSB Gold Standard Corporation AG, violated securities laws by making false claims and omitting key information when selling these assets.
The accusations focus on GS Partners’ promotion and sale of digital tokens linked to a Dubai skyscraper, metaverse real estate, liquidity pools, and other crypto assets with promises of high returns.
Authorities say the company promoted investments in the “G999 Tower,” a 36-story building in Dubai, and in the digital tokens of the metaverse platform Lydian World. These ventures were touted as unique opportunities for generating “lucrative profits” and “generational wealth” supposedly backed by blockchain technology and gold.
Additionally, GS Partners allegedly ran a multi-level marketing (MLM) platform selling “MetaCertificates” to investors, which authorities claim were also part of the fraudulent offerings. Regulators accuse the entities, reportedly controlled by Josip Dortmund Heit, of orchestrating a broad crypto investment fraud that poses immediate public harm.
State regulators, including those in California and Texas, issued emergency orders for GS Partners to cease operations. Similar actions were taken by authorities in Alabama, Kentucky, New Jersey, and Wisconsin, who allege that the company engaged in deceitful practices by making misleading claims about the nature and profitability of its crypto investments.
The regulators highlight the use of high-profile celebrity endorsements, including boxer Floyd Mayweather Jr. and soccer player Roberto Carlos, to lure investors into the schemes, which they assert had no real underlying value.
