German cryptocurrency company Karatbars has been ordered to stop doing business after being accused of running a pyramid scheme.
Founded in 2011 by Harald Seiz, the firm offered online purchases of “cryptonyzed gold” tokens, offering customers a commission to sign up other “affiliates.” Seiz claims to have raised about $100 million through the sale of his KaratGold Coin (KBC).
“This is a new community, a new world, this is going to be very big. The Karatbar and the cryptocoin is the future. I hope everybody will join this platform,” he said in a video, according to The Guardian.
But in May, authorities in Namibia called Karatbar a pyramid scheme, while last month, Florida’s financial regulator denied that the company had been issued a banking license. Earlier this week, South Africa’s Financial Sector Conduct Authority (FSCA) issued a warning for the public not to do business with the company. In addition, Germany’s banking watchdog, BaFin, has reportedly issued a cease-and-desist order to Karatbit, ordering it to settle outstanding claims. An investigation has also been launched into the company.
In other news, the People’s Bank of China (PBoC) has denied a report that the country’s stablecoin is set to launch.
WebsiteAPI with a countdown that showed the national stablecoin would launch on November 20. But PBoC said the site is false, and also warned about the rise of scams and ponzi schemes related to the digital currency.
“Anything that is trading in the market under the name of DC/EP or DCEP is not the national digital currency, and any launch time suggested on the Internet is inaccurate,” the central bank said on in a statement, according to CoinDesk.
“We did not authorize any platform to trade DCEP,” the bank added. “Investors should be aware of companies that pose as the central bank to attract people to ‘trade’ the digital currency, which could be fraught with misleading information.”
And the U.S. Department of Justice announced that two Massachusetts men were arrested and charged with conducting a scheme to take over victims’ social media accounts and steal their cryptocurrency. Eric Meiggs, 21, of Brockton, and Declan Harrington, 20, of Rockport, have been indicted on one count of conspiracy, eight counts of wire fraud, one count of computer fraud and abuse and one count of aggravated identity theft.