GS Partners, a company involved in various crypto investments, has agreed to fully refund its investors as part of a settlement with five U.S. states.
On Monday, the Texas State Securities Board (TSSB) announced that Texas, Alabama, Arizona, Arkansas, and Georgia have reached a settlement with GS Partners and its owner, Josip Heit. This follows a multi-state investigation revealing that GS Partners defrauded investors through deceptive claims about the potential returns and risks of its crypto asset investments.
GS Partners to Reimburse 100% of Funds
Under the settlement terms, GS Partners will return the full amount of funds to investors, provided that all civil claims and investigations against the company are dropped. Notably, neither GS Partners nor Heit will face any monetary penalties. Additionally, GS Partners has agreed to halt the sale of unregistered securities in the involved states.
The case dates back to enforcement actions initiated in November 2023, when state regulators accused GS Partners of misleading investors with false information. The company had marketed investments in tokenized shares of a Dubai skyscraper and a virtual real estate project called “Lydian World,” promising returns of up to 5% per week. However, GS Partners failed to meet its $175 million fundraising goal, resulting in significant losses for investors.
In a press release, Josip Heit supported the settlement and reiterated his commitment to refund all eligible investors through a formal claims process. He emphasized the company’s focus on restoring its reputation and protecting its customers.
Heit’s legal team also indicated that additional U.S. states might join the settlement, potentially broadening the scope of investor refunds.
Surge in SEC Crypto Enforcement Actions
In related news, the U.S. Securities and Exchange Commission (SEC) has significantly increased its enforcement actions against cryptocurrency firms and executives in 2024. The SEC has imposed nearly $4.7 billion in fines, marking a more than 3,000% increase from 2023.
This surge includes a landmark $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, which the SEC described as its largest enforcement action to date. The SEC has conducted 11 enforcement actions this year, a 3,018% rise in penalties compared to the previous year, despite having 19 fewer cases.
The total fines this year include forfeiture, disgorgement, civil penalties, settlements, and prejudgment interest. This figure represents a dramatic increase from the $150.3 million in penalties imposed in 2023. The average fine has surged from between $5 million and $35.2 million in previous years to over $420 million in 2024, driven in part by the Terraform Labs case.
Other notable cases this year include actions against GTV Media Group, Ripple Labs, and fraudsters John and Tina Barksdale, each exceeding $100 million in fines.
