- The Texas State Securities Board filed an emergency action against companies controlled by Josip Heit for conducting a fraudulent $175 million digital asset offering tied to a metaverse project.
- The companies held three rounds of metaverse property sales where investors purchased unregistered security tokens representing land ownership. The tokens quickly lost almost all value.
- This is not the first time regulators have warned about or taken action against GS Partners, one of the companies involved, for fraudulent activities. The Texas board has now ordered the companies to cease operations in the state.
The Texas State Securities Board has filed an emergency enforcement action against a network of companies controlled by Josip Heit for allegedly conducting fraudulent digital asset offerings tied to a proprietary metaverse. The companies involved are GS Partners, GS Smart Finance, and GS Wealth.
Details of the Fraudulent Token Offering
In September 2021, the companies held three rounds of metaverse property sales where investors could purchase tokens representing ownership of land in the G999 Tower metaverse. The tokens were priced at $963 but quickly lost almost all their value on decentralized exchanges after the $175 million raise target wasn’t met.
According to regulators, the tokens constituted unregistered securities. Other digital asset investments promoted by the companies, including gold tokens, the G999 coin, Lydian World metaverse tokens, and Elemental Certificates were also unregistered securities.
Regulators Take Action
The Texas State Securities Board has ordered the companies to cease and desist from all activities in the state. Securities regulators in Canada have also warned that GS Partners is not registered to do business in the country.
This is not the first time GS Partners has drawn scrutiny from regulators. The Ontario Securities Commission, and securities regulators in Saskatchewan, British Columbia, Alberta, and Quebec have all previously issued warnings regarding the firm.