GS Partners probe: Yet another scam blemishes the cryptocurrency horizon

The Financial Sector Conduct Authority (FSCA) has issued an alert, highlighting that almost 10 jurisdictions have published warnings relating to GS Partners. These warnings emanate from financial authorities in Texas, Washington, California, Wisconsin, Canada, British Columbia, Alberta, Saskatchewan and Quebec.

GS Partners is not licensed under any financial sector law to provide financial products or financial services in South Africa and the FSCA is conducting a preliminary investigation on the back of concerns about the unrealistic returns offered by the company.

The FSCA approached GS Partners and gave the company an opportunity to respond by Friday, 24 November. However, the company answered the FSCA only on Monday, 27 November, not with any response to the FSCA questions, but rather a request of its own.

GS Partners has asked the FSCA to provide information relating to complaints received and to clarify the basis upon which the FSCA was requesting more information relating to its business.

A curious response to a financial regulator.

As all financial service companies should be aware, offering financial products or services in South Africa requires authorisation by the FSCA.

Without commenting on the specifics of GS Partners’ business, the FSCA points out that offering financial products or services in South Africa requires authorisation by the FSCA.

The rulings issued by US and Canadian financial authorities on 16 November included:

• Texas State Securities: Issued an emergency cease and desist order on 16 November, listing Facebook, LinkedIn, Twitter and YouTube accounts linked with the company. The order was issued for violating the Securities Act and committing fraud.
• Washington State Department of Financial Institutions: Issued an emergency action against Swiss Valorem Bank, GSB Gold Standard Bank (not related to South Africa’s Standard Bank in any way), citing that they have been representing themselves as banks, although they are not licensed or chartered as banks federally or in the state of Washington. As per the Washington State Department of Financial Institutions, this means that investors’ purchases are not insured by the Federal Deposit Insurance Corporation, Securities Investor Protection Corporation, or the National Credit Union Administration, and as such, investors have no protection from investment losses.
• The California Commissioner of Financial Protection: Issued a cease and desist order against GBS, Gold Standard Partners and Swiss Valorem Bank prohibiting these companies from any further offer or sale of securities in California, including but not limited to investment contracts known as certificates.
• State of Wisconsin Department of Financial Institutions:  Announced an enforcement action to stop an ongoing international fraud scheme. The action accuses GSB Gold Standard Bank LTD, doing business as GS Partners, of offering and selling fraudulent certificates tied to digital assets and foreign currency exchanges, as well as investments in staking pools in a proprietary metaverse. The ruling noted that GS Partners is not registered to offer or sell securities in Wisconsin; however, GS Partners had promoted investments through a multilevel marketing scheme paying “lavish commissions to agents”.
• Ontario Securities Commission: Simply noted on 8 August this year that “GS Partners aka Swiss Valorem Bank is not registered in Ontario to engage in the business of trading in securities.”
• British Columbia Securities Commission: Issued a cautionary on 30 May this year urging BC residents to exercise caution when dealing with GS Partners or any affiliates including GSB Gold Standard Pay, GSB Gold Standard Bank, Gold Standard Trade, Lydian World, G999, GSTrade and Swiss Valorem Bank – all of whom claimed to offer cryptocurrency investment services. As per the cautionary, GS Partners is not registered to trade in or advise on securities or derivatives in BC.
• Alberta Securities Commission: Has included GS Partners on a list of companies and individuals that are not registered with the ASC and that appear to be engaging in activities that either require registration under Alberta securities laws or may be investment scams.
• The Financial and Consumer Affairs Authority of Saskatchewan: Released a warning on 12 June this year about “multiple online entities and aliases: Fxeasyexchange, JPCrypto and a representative using the alias “Nick Rossi” and “GS Partners” – none of which are registered to trade in or sell securities or derivatives in Saskatchewan.

Daily Maverick was able to find the names of three people who are supposedly representing GS Partners in South Africa, but was unable to contact them. Please email [email protected] if you have invested money with GS Partners, Gold Standard Bank, Swiss Valorem Bank or any other entities mentioned in this article. DM