The Texas State Securities Board has accused a network of companies under the “GS” brand and operating from Germany of fraudulent activities “tied to digital assets, investments in a staking pool in a proprietary metaverse.” The network of companies is controlled by Josip Dortmund Heit.

As described by regulators on November 16, respondents GS Partners, GS Smart Finance and GS Wealth allegedly held three rounds of metaverse property sales beginning September 2021. At the time, investors were informed that could purchase XLT Vouchers, or BNB Chain tokens that represented ownership of one square inch of a unit in the company’s G999 Tower metaverse, at 9.63 Tether (USDT) per voucher. However, the token rapidly lost its value, to less than 0.0000049 USDT apiece on decentralized exchange PancakeSwap, after the respondents failed to reach its $175 million raise target for the offering.

“Respondents have not been registered with the Securities Commissioner as dealers or agents at any time material hereto.”

Regulators allege that other investment products created by GSB, such as its Lydian World metaverse tokens, gold tokens, G999 coin, and Elemental Certificates, also constituted unregistered security offerings. The Texas State Securities Board has filed an emergency enforcement action for the GSB group of companies to cease and desist from such activities in the state.

On August 15, the Ontario Securities Commission issued a warning that GS Partners was not registered to do business in the Canadian province of Ontario. Previous warnings regarding the firm were also published by securities regulators in the Canadian provinces of Saskatchewan, British Columbia, Alberta, and Quebec. 

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