Texas regulators have set their sights on a network of companies operating under the “GS” brand, headquartered in Germany. These companies, notably GS Partners, GS Smart Finance, and GS Wealth, are embroiled in allegations of fraudulent activities. These allegations specifically concern investments in a proprietary metaverse and related digital assets.
The issue began when GS Partners launched a series of metaverse property sales in September 2021. Investors were offered XLT Vouchers, or BNB Chain tokens, representing ownership of a square inch in the G999 Tower, a virtual real estate project. Each voucher was priced at 9.63 USDT.
However, the project failed to meet its ambitious $175 million fundraising goal, drastically declining the token’s value. On PancakeSwap, the token’s value dropped to less than 0.0000049 USDT.
This decline in value and failure to meet fundraising targets have caught the attention of the Texas State Securities Board. The Board asserts that the companies involved have never been registered with the Securities Commissioner as dealers or agents, a crucial point in their decision to intervene. Consequently, an emergency enforcement action demands that these activities cease immediately in Texas.
The concerns of the Texas regulators are echoed in previous warnings issued by the Ontario Securities Commission and securities regulators in Saskatchewan, British Columbia, Alberta, and Quebec. All these authorities have highlighted the lack of registration and potential risks associated with GS Partners’ operations.
This situation underscores the risks inherent in the digital asset market, especially in innovative but untested areas like tokenized real estate in the metaverse. Initially attracted by the novel concept of digital real estate ownership, investors now face the reality of a volatile and uncertain market.
The case against GS Partners highlights the importance of regulatory compliance in the digital asset domain and reminds investors of the need for due diligence and caution when exploring new investment opportunities in digital assets.