Texas Regulators Take Action, Arkbit Closed On Alleged Fraud

JAKARTA Texas State Security Authority has taken firm action against cloud mining operations of crypto assets suspected of carrying out investment fraud practices. The order to terminate was recently issued against Arkbit Capital, due to alleged fraud.

Arkbit Fraud Cloud Mining Scheme

Arkbit Capital, along with related entities such as Arkbit Capital Holdings, ABC Holdings LLC, and ABC Mining, pledged daily yields of between 1.6% to 2.8% over 120 days on crypto deposits ranging from $50 to $49,999. However, an investigation by Alexis Cantrell, a Supreme Audit from the Texas State Securities Council, revealed that Arkbit's claims about operating data centers in Arkansas for cloud mining of various crypto assets were fake.

Arkbit also used fake media assets to deceive investors, including fake videos of their CEO, Delmar Estabrook, who spoke at a cryptocurrency conference in Austin, Texas. However, state regulators found no evidence that Estabrook or Arkbit Capital had attended the event.

Quoted from CryptoNews, "They are selling crypto asset cloud mining scams built on fraud and manipulation," said Joe Rotunda, Director of the Enforcement Division at the Texas State Securities Council.

Furthermore, the order revealed that Arkbit's payment processing was facilitated through CoinPayments.Net, although the processing policy prohibits users from the United States. Arkbit's CoinPayments account was traced to an individual in Hyderabad, India, not in Arkansas as claimed.

Investor Protection Priority By Texas Regulators

Regulatory action against Arkbit is part of a sustainable effort by the Texas State Securities Council and other state regulators to proactively fight crypto investment fraud and protect residents from unscrupulous actors.

In 2018, the Texas State Securities Council issued an emergency termination order against some of Utah-based individuals and companies allegedly offering unregistered crypto asset mining investments with an unreasonable annual return promise of between 180% and 250%.

Regulators highlight how this fantastic return promise in the short term is a signature of a typical warning from fraudulent offers. Respondents are also accused of deliberately failing to disclose basic information and risk warnings to investors about the volatility of crypto assets, technical vulnerabilities, regulatory uncertainties, and market competition risks.

"Against crypto fraud requires a multi-prong approach from aggressive enforcement actions accompanied by a persistent investor education campaign," Rotunda said.