California, Texas Among States Accusing GS Partners of Misleading Crypto Investors

Offers of a tokenized Dubai skyscraper and assets in the metaverse were fraudulent and unregistered, state regulators say, and boosted by celebrities such as boxer Floyd Mayweather.

AccessTimeIconNov 16, 2023 at 9:50 p.m. UTC
Updated Mar 9, 2024 at 2:01 a.m. UTC

Multiple U.S. states have ordered GS Partners to halt operations, accusing the company of defrauding investors in a number of crypto schemes, including tokenized pieces of a Dubai skyscraper and stakes of metaverse property.

The operation, broadly labeled by the agencies as GS Partners, is an organization that includes GSB Gold Standard Bank Ltd., Swiss Valorem Bank Ltd. and GSB Gold Standard Corporation AG – all said to be controlled by Josip Dortmund Heit. The businesses hired sports celebrities such as former boxer Floyd Mayweather Jr. and footballer Roberto Carlos to get attention to an array of investments, regulators said.

The affiliated businesses are accused of violating state laws when they "offered and sold unqualified securities and made material misrepresentations and omissions to investors related to crypto asset investments," according to the case filed Thursday by the California Department of Financial Protection and Innovation. Texas, Alabama and other jurisdictions are pursuing similar actions.

The business has been "broadly perpetrating various fraudulent investment schemes

that are threatening immediate and irreparable public harm," according to an action Thursday from the Texas State Securities Board.

"These investment schemes are often marketed as a unique opportunity to earn lucrative profits and secure generational wealth through blockchain technology, a metaverse, liquidity and staking pools, a tokenized skyscraper and digital assets purportedly convertible to physical gold," the Texas agency described in its emergency cease-and-desist order.

One part of the business offered digital assets tied to the metaverse's Lydian World, and another investments in a 36-story "G999 Tower" that "radiates majesty as it shines under the burning sun" in Dubai, according to marketing information described in the Texas case. The business also operated a multi-level marketing platform that offered “MetaCertificates,” regulators said.

Heit and other GS Partners executives, including Bruce Innes Wylde Hughes and Dirc Zahlmann, are directly named in the actions.

Neither Heit nor the company immediately responded to attempts to reach them through business sites and social media.


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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.