Two firms, named GS Partners and its wholly owned subsidiary, Global Strategic Partners incorporated (GSPI), are accused of defrauding hundreds of investors by using their crypto funds to invest in the “Metaverse” economy, an ecosystem built on the Metaverse blockchain for “crowdsourced investments, distributed ledgers, AI, big data, blockchain and other platforms.” The received funds were reportedly deposited into the private bank accounts of the founders and members, who then used these funds to live lavishly and invest in unrelated ventures outside of the Metaverse. According to court documents, the investors’ losses have been estimated to exceed $5 million.
The SEC alleged that GS Partners and GSPI, which were founded and controlled by Gal Sachar and Steve Ansell, had no legitimate business models and that they unlawfully sold securities by offering opportunities for high returns in return for cryptocurrency investments. The SEC’s complaint also alleges that the defendants falsely represented to investors that their money would be used to invest in the “Metaverse,” when in fact it was used for their personal expenses, such as luxury cars, private jets, and luxury hotel rooms.
The SEC’s complaint recommends that the defendants be held liable for violating Section 17(a)(1) of the Securities Act of 1933, which prohibits the offer and sale of any security in interstate commerce, and Section 10(b) of the Securities Exchange Act of 1934, as well as violating the SEC’s antifraud rules. The complaint also requests an order disgorging the defendants’ profits, civil money penalties, and an injunction against future violations.
