Failed ‘$175M’ real estate token raise draws ire of Texas regulators

“GS Partners promoted the products through a multilevel marketing scheme paying lavish commissions,” regulators say.

The Texas State Securities Board has leveled serious allegations against a network of companies operating under the “GS” brand, based in Germany and controlled by Josip Heit. The accusations, made public on November 16, involve fraudulent activities related to digital assets and investments in a staking pool within a proprietary metaverse.

According to the regulators, the companies in question – GS Partners, GS Smart Finance, and GS Wealth – initiated three rounds of sales of metaverse property starting in September 2021. During this period, investors were enticed to purchase XLT Vouchers, or BNB Chain tokens, which were purported to represent ownership of one square inch of a unit in the G999 Tower metaverse. These vouchers were initially priced at 9.63 Tether (USDT) each. However, the value of these tokens plummeted dramatically, falling to less than 0.0000049 USDT per token on the decentralized exchange PancakeSwap. This crash in value occurred after the companies failed to meet their ambitious fundraising goal of $175 million for the offering.

The Texas State Securities Board’s investigation further revealed that other investment products offered by the GSB group, including Lydian World metaverse tokens, gold tokens, G999 coin, and Elemental Certificates, were also potentially unregistered security offerings. As a result, the Board has issued an emergency enforcement action demanding that the GSB group cease and desist from these activities within the state of Texas.

This is not the first time GS Partners has faced regulatory scrutiny. On August 15, the Ontario Securities Commission issued a warning that GS Partners was not authorized to conduct business in Ontario, Canada. Similar warnings have been previously issued by securities regulators in other Canadian provinces, including Saskatchewan, British Columbia, Alberta, and Quebec, indicating a pattern of concern regarding the firm’s operations and offerings.