The German financial regulator has proven time and time again to be very strict when it comes to giving penalties and bans to those that break the law. The latest ecosystem to suffer the long arm of the law is the Karatbars one, as financial watchdogs from Germany and South Africa took separate actions against it.
This week, the BaFin, Germany’s highest financial supervisory authority, revealed that it issued a cease and desist order against the Karabit Foundation late last month because it had been issuing its associated token, the KaratGold Coin, without having the required licensing in the European nation.
The KaratGold Coin is a gold-backed digital asset. On the other hand, the Financial Sector Conduct Authority (FSCA), which is the African country’s primary financial regulator, issued an official warning to the community of crypto investors to avoid any promotions offered by Karatbars International GmbH, which is a German-based company that is, according to reports, associated with the KaratGold coin.
The BaFin order clearly stated that the foundation must “wind up [its] electronic money business” in Germany. At the moment of writing this piece, the financial regulator hadn’t provided another official comment about the matter.
Run On The Ethereum Blockchain
The KaratGold Coin, officially KBC, is on the Ethereum blockchain. Around 30 cryptocurrency exchanges currently list the digital asset, most notably Yobit. It is said that a second coin will be launched in the not so distant future, the KaratBank Coin, or KCB.
The KaratBit foundation has its headquarters in Belize, and it issues the KaratBank Coin and runs the KaratBank network, per information found on the white paper of the KaratBank Coin. The entity is described in the document as unregulated.
In the past few hours, Karatbars International has defended itself and adamantly denied any accusations that were leveled in Handlesblatt, a local business outlet. The Guardian ran the story this week, and the firm itself went to Facebook to talk about the issue.
Handlesblatt had stated that the Foundation had been mandated to return significant resourves to investors, more specifically $100 million in funds. That money is deemed as the equivalent of the amount that was raised through an Initial Coin Offering last year.
At the same time, the CEO of Karatbars Harald Seiz, explained in the Facebook post that the BaFin made a mistake in the order against his company, and instead based its decisions on a scam web page that wasn’t associated with the legitimate one.
“We are completely transparent, we have nothing to hide, if there are unanswered questions, we will clarify them, of course, we fully cooperate with the relevant authorities and are very anxious to clear up any misunderstandings as fast as possible interested,” Seiz observed in the post.
The executive also explained that the KaratGold Coin (KBC) is a utility token, and as a consequence, it is “not subject to prospectus” requirements under the regulations of the German watchdog. “Karatbars and its products have never damaged a customer or partner,” he said.
In the case of the FSCA decision, it was reported that the regulator stated that KaratBar International had asked investors in South Africa to acquire specific assets without being properly licensed to operate there.
By Andres Chavez