The SEC “emergency” halted the Digital Licensing pyramid scheme in Utah. They would have defrauded investors out of up to $50 million in Bitcoin and Ethereum. The fraudulent scheme was planned from March 2021 to sell unregistered securities under the title “node license”.

The United States Securities and Exchange Commission (SEC) announced the “emergency” stop of a fraud scheme carried out by Utah-based cryptocurrency company Digital Licensing. The fraudulent crypto scheme would be for 50 million dollars and would involve 18 people.

The SEC admitted that it received “emergency help” from authorities to stop the Digital Licensing fraud scheme, obtaining a temporary asset freeze, a restraining order, actions against the company’s four directors, as well as other emergency measures. The platform operated as a “DEBT Box”.

SEC: Digital Licensing Scammed Investors with Bitcoin and Ethereum

The Digital Licensing officers charged are Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson, who along with 13 others ran a $50 million fraud scheme. The scheme purported to sell cryptocurrency to hundreds of Americans. The scam would have received deposits in Bitcoin and Ethereum.

The United States District Court for the District of Utah holds that the fraudulent scheme was planned since March 2021 to sell unregistered securities under the title “node license”, which would allegedly generate cryptocurrency tokens through mining. It promised that generating companies would “boost” the value of the tokens.

Digital Licensing promised to generate tokens called “DEBT Box”, which, upon entering investment, resulted in million-dollar profits for managers and some investors. The SEC maintains that the “node licenses” were fake because they were “a front” to hide that each token in the supply was a code on a Blockchain.

Tracy S. Combs, Salt Lake regional SEC director, explained the following:

“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining. We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”

Furthermore, the SEC’s complaint alleges that DEBT Box and its principals, along with defendants James Franklin, Western Oil Exploration Company Inc., and Ryan Bowen, lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens.

SEC Will Follow the “Hunt” of Digital Licensing Executives

The Stock Exchange Commission will seek that the managers return all the illicit profits and for this, the investigation will continue, while they seek to gather the assets for the benefit of the affected investors. The SEC has been very vigilant when it comes to securities fraud in recent years. especially when the alleged values ​​fall under the umbrella of cryptocurrencies.

According to the SEC report, the investigation “is being conducted by Joseph Watkins, Laurie Abbott, and Mitchell Davidson of the Salt Lake Regional Office and Karaz Zaki of SEC Headquarters.”

The SEC issued the following recommendations to investors to detect fraud:

• High-yield claims with little to no risk.
• Non-registered investment professionals.
• Aggressive sales tactics.
• Problems with sales documents.
• No net worth or income requirements.
• “No one else seems to be involved.”
• Virtual or simulated offices.
• Unsolicited investment offers.
• Suspicious or unverified biographies of managers or promoters.

By Audy Castaneda

This happened to a developer who wanted to create a cryptocurrency.

A developer “accidentally” staked five ethers worth around $9,000 at the current ETH price, instead of his test cryptocurrency. The problem is that everything has been left blocked for 100 years.

The developer got noticed on 4chan, a technology discussion forum. There he asked for help creating his ERC-20 test token on the Ethereum tesnet and staking it, thus blocking it.

A netizen then suggested that he use the UNCX network protocol to lock up liquidity tokens, which he did by adding five ethers and 1 billion proof tokens as liquidity on Uniswap.

He then proceeded with a padlock using the UNCX protocol, thus sealing the fate of these tokens for the next 100 years, which is until December 31, 2123.

After this maneuver, he declared that he would “get out of there” without specifying more. Shortly after, he confirmed that he had managed to recover his ETH, but left doubts by asking how to unlock the tokens, still on 4Chan.

He then claimed that Ether had been locked up for 100 years and that this was the Ethereum testnet. Another user revealed that this was not the case and that these funds had been locked up on the actual mainnet.

Crypto Twitter Lights Up: Crypto Caps $6 Million

The case quickly went viral on social media, with investors seeing the TEST token as an investment opportunity, both for speculation and for the “involuntary” blocking of 1 billion tokens for 100 years.

This caused many to dismiss the possibility of a “rug-pulling”-style scam, where developers of a cryptocurrency abandon the project and sell large amounts shortly after a sharp appreciation, resulting in the cryptocurrency’s sudden collapse, leaving investors in the dark.

The debates quickly began. Was it really a mistake, or was this gesture premeditated to attract attention? For some, the intentional blocking of funds could be a bullish sign for the project, while for others it was just a deliberate ploy to get attention.

Word quickly spread through the cryptocurrency world, and the test token in question generated buzz, with a market capitalization momentarily reaching $6 million. But fate seemed to play against the developer, and the price of the token eventually plummeted, losing 70% of its value.

Crypto Community Reactions

A 4chan user recommended the UNCX Network protocol to lock up liquidity tokens, which resulted in the developer adding five ether and 1 billion test tokens as liquidity on Uniswap and receiving 70,700 LP tokens in return. They then locked the LP tokens using the UNCX network protocol, setting a duration to December 31, 2123.

The developer initially claimed that the locked ether was on the Ethereum testnet; however, another user corrected them and revealed that the real funds were actually locked up for a century. After the event, the price of the test token skyrocketed, with its market cap peaking at $6 million before falling to $1.5 million.

Multiple commenters on Twitter and 4chan have cast doubt on the incident, suggesting it was a premeditated scheme to gain attention. As the debate continues, some Twitter users have even requested to be reminded of the event 100 years from now.

By Leonardo Perez