On Tuesday, DFPI, the financial regulator in California made an alarming announcement involving a Ponzi scheme. According to the regulatory authority, it is to launch a crackdown on multiple cryptocurrency firms on the suspicion of involvement in the Ponzi scheme.
The DFPI has Targeted 11 Cryptocurrency Firms
The DFPI announced on September 27 that it is currently investigating multiple cryptocurrency firms on the suspicion of their involvement in a scheme to defraud investors.
According to reports, the DFPI launched the crackdown against the cryptocurrency firms on Tuesday. It has reportedly targeted 11 different firms that are all from the cryptocurrency industry.
Orders Issued by the Court against the Entities
The DFPI has already raised the matter with the court, having them issue multiple orders against the 11 cryptocurrency firms. According to the report from the court, the financial watchdog had multiple refraining and desisted orders issued by the court against the 11 entities.
In the complaint raised with the court, the DFPI claimed that the cryptocurrency firms were in violation of the securities laws of California.
The regulations also claimed that all of the cryptocurrency firms were involved in running a Ponzi or a pyramid scheme against the investors.
The claim made by the Regulator
In the allegations, the regulator has added that the entities have been luring investors to make hefty deposits in return for high yields and benefits.
However, the entities were involved in accumulating funds from new investors and giving them to the existing investors showing them they were generating profits.
This is a clear violation by the 11 entities and a clear example of a Ponzi scheme.
Entities Ran Referral Programs
According to the financial watchdog, all of the cryptocurrency firms added to the list were involved in offering referral programs to investors.
The entities offered huge gains and commissions to the investors for every single referral. This way, the entities were able to bring more users to their platforms.
The referral program that the entities ran was an example of a pyramid scheme. Apart from offering commissions to the investors for bringing in new investors, these entities also paid them if the referred investors made deposits.
These entities would claim to continue offering them more commissions as the referred investors continued making deposits, and carrying out trades.
Cryptocurrencies to Face the Crackdown
According to the list submitted by the financial watchdog at the court, the cryptocurrency firms include Polinur ME Limited, Ramabit, Sity Trade, and Sytrex Trade.
Other cryptocurrency firms include Sytrex Trade, Vexam Limited, World OTC Limited, COTP, Elevate Pass LLC, Greencorp Investment LLC, Metafi Yielders, and Pegasus.
James Thompson 
Michael Rafael