The Texas State Securities Board Halts Decentralized Lending Pool Linked to Russian Government
The Texas State Securities Board has taken action to stop the sale of securities by a decentralized lending pool called BigWhale.io. The board issued an emergency cease and desist notice against the platform, which is a staking and lending decentralized finance (DeFi) protocol based on Binance Smart Chain. The company has been under scrutiny for making potentially false promises, including claims of raising $6 million from over 2000 investors and being attacked by a hack that drained all funds. The securities authority release also mentioned that BigWhale.io threatened to use assets within the Russian government for revenge.
Decentralized App Promotion and False Promises
According to the cease and desist order, BigWhale.io has been promoting digital asset lending investments through a decentralized application (dapp). The company promised to lend these assets to vetted borrowers who would pay interest to BigWhale.io, allowing them to pay lucrative interest to their investors. The release highlighted that the interest rates offered were as high as 2% per day, with the potential for a return of nearly 500% after 90 days. Additionally, BigWhale.io relied on social media and online influencers for promotion, using a multilevel marketing scheme.
Lack of Transparency and Red Flags
BigWhale.io failed to disclose its capitalization and provide other necessary information related to its securities offering. It also refused to reveal its principals and office locations, raising concerns about transparency. Commissioner Iles emphasized that concealing the identities of individuals handling money is a significant red flag for investors.
“Investors should generally avoid firms that dwell in the shadows, promoters that hide from daylight, and offerings carefully crafted to avoid laws designed to protect the public. In short, offerings that operate in obscurity are best avoided.”
BigWhale.io and Allegations of a Ponzi Scheme
An audit conducted recently raised suspicions about BigWhale.io’s DeFi lending pool, suggesting that it may be operating like a Ponzi scheme by using user deposits as rewards for other individuals. The company announced that it suffered a hack resulting in the loss of investors’ funds. Following the hack, BigWhale.io made threats involving the use of assets within the Russian government, hoping to provoke a response from the perpetrator.
“We will go above and BEYOND legal resources, and we will stop short at saying what the Russian government and its contacts are capable of. We are not responsible for what actions the hacker or hackers may face from agents who may or may not be working directly with us.”
Hot Take: Texas Securities Board Takes Swift Action Against BigWhale.io
The Texas State Securities Board has demonstrated its commitment to protecting investors by swiftly halting the activities of BigWhale.io. The decentralized lending pool has faced allegations of false promises, lack of transparency, and potential involvement with the Russian government. This case serves as a reminder for crypto enthusiasts to exercise caution when engaging with platforms that operate in obscurity and fail to provide necessary information. It also highlights the importance of regulatory bodies in safeguarding investors’ interests in the rapidly evolving crypto landscape.
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