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‘Bitcoin Pope’ faces up to 10 years in jail for running two crypto scams

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A securities regulator in the United States, the Texas State Securities Board (TSSB), has detected another batch of alleged cryptocurrency scams.

On Sept. 3, Texas Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order against two alleged crypto scam schemes known as Forex Birds and PEK Universe.

The published order names Kumar Babu Bondesi and Darwin Eric Balusek as the alleged operators of the schemes. According to the TSSB, Balusek is also known under the nickname “Bitcoin Pope.”

Operating abroad, the respondents are accused of fraudulent securities offerings tied to foreign exchange (forex) and cryptocurrencies, the authority said. According to the TSSB, Forex Birds was allegedly promising investors earnings up to 11%, with deposits up to $1 million. Forex Birds is also accused of misleading investors by claiming to be registered with a number of authorities in Europe and Australia.

Pek Universe, the alleged promoter of cryptocurrency programs, was promising to earn daily profits for investors — up to nearly 2% per day for 30 days. Both Forex Birds and Pek Universe were not registered to deal in securities in Texas, the regulator said.

According to the official order, the respondents are facing a $10,000 fine or two to 10 years in prison or both. The respondents must request a hearing with the regulator before Sept. 31. As of press time, both Forex Birds and Pek Universe websites are still intact.

The Texas State Securities Board is one of the most active regulators in the U.S. in terms of the crypto industry. The authority is known as the first state securities regulator in the U.S. to enter an enforcement action against a crypto-related firm. In July 2020, the TSSB shut down Mirror Trading International, a multi-level crypto scam scheme operating from South Africa.



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.