Texas and Alabama authorities have issued cease and desist orders to South African companies promoting a crypto-currency credit card scam.
According to an August 14 announcement, the Texas State Securities Board (TSSB) and the Alabama Securities Commission (ASC) simultaneously issued cease and desist orders against Lance Angus Jerrard and the South African companies Liquidity Gold Trust, Liquidity Gold Solution and Liquidity Global Card Solution.
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The companies and Jerrard are accused of committing fraud by promoting a product called the Liquidity Card in the social media and on a local Austin radio station, falsely claiming that investors have a guaranteed way to make money while staying at home during the pandemic. They reportedly said the card was „a MasterCard that works like a traditional debit card.
The companies have used their advertising time to claim that their product would help cardholders avoid taxes by receiving and spending the proceeds as stablecoins, including USD Coin (USDC), TrueUSD Coin (TUSD) and PAX Coin (PAX).
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„The prospect of a guaranteed monthly income may seem like a dream come true in times of economic uncertainty,“ said TSSB’s director of enforcement, Joe Rotunda. „Unfortunately, crypto-currency scams typically do not support promises of prosperity with facts and evidence. In the end, it’s often smoke and mirrors, with a technological twist.
How the scam works
The campaign was reported to have started in October, „with the goal of recruiting 8 million cardholders in 36 months,“ according to the announcement.
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The plan works by recruiting new members and having them invest at least $1,150 in one or more of Liquidity’s 8,400 worldwide project association portions. Investors could allegedly earn residuals from the fees paid by Liquidity cardholders.
The TSSB announcement stated:
„Liquidity companies project a lucrative cash flow, claiming that investors can receive USD 1,516.72 per month portion after 18 months and USD 5,008.62 per month after 24 months. Profits are supposedly guaranteed. According to the order, Liquidity companies are offering investors a 100% written money-back guarantee“.
According to the cease and desist order, these claims are fraudulent. In addition, the three companies of Liquidity and Jerrard are not registered to sell securities in Texas. The TSSB reported that they had withheld essential information from potential cardholders about the risk associated with the plan and how they might obtain a return on their investment.
Jerrard and the associated companies have 30 days to contest the cease and desist order.