(Kitco News) – The Texas State Securities Board has moved to shut down a digital gold vault that it claims is actually an illegal international multilevel marketing (MLM) operation, according to a recent enforcement action published on its website.
“Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order to stop an international multilevel marketing scheme offering Texans the opportunity to invest in a digital gold vault,” the order said.
According to the Securities Board, Billionico Academy “began by promoting itself as an education platform that sold learning modules” but on April 19, 2024, the company started promoting investments in “a digital gold vault issued by Auratus, a precious metals firm purportedly operating in Hong Kong.”
“The order alleges the investments are being illegally and fraudulently offered in Texas and the respondents are threatening immediate and irreparable public harm,” they wrote.
The order alleges that Billionico Academy CEO Frank Deyle “served as the Marketing Advisor and an Advisory Board Member for Swiss Valorem Bank Ltd., and that he promoted investments issued by GSB Gold Standard Bank, Ltd dba GS Partners. The Board said that none of this was disclosed to clients of Billionico Academy.
“Notably, the Securities Commissioner recently entered Emergency Cease and Desist Order No. ENF-23-CDO-1879 against Swiss Valorem Bank Ltd and GS Partners, accusing them of illegally and fraudulent offering investments tied to digital assets,” they wrote.
The order alleges that Auratus has been offering clients of Billionico Academy investments in digital gold vaults. The investments range from 150 euros for a digital gold vault with 4.285g capacity and 10,000 euros for a vault with 285.714g capacity. “After purchasing the product, investors allegedly queue and, once admitted, receive a pro rata portion of passive yield generated by the digital gold vault,” the order claimed. The investment term ranges from 12 to 60 weeks.
“Many legitimate firms are leveraging new technologies to improve operations or increase efficiencies,” Commissioner Iles said in the announcement. “However, bad actors are attempting to capitalize on interest in these technologies to defraud the public. Retail investors considering investments tied to novel, complex, or revolutionary technologies should make sure they understand the products, the risks associated with the investments, and the manner in which returns are generated. It is equally important to know the people you are entrusting with your hard earned money.”
According to the order, Billionico Academy used a multilevel marketing scheme to recruit clients, who are then eligible to purchase the investments issued by Auratus. “It also alleges that Auratus is implementing a multilevel marketing scheme to compensate clients of Billionico Academy that recruit new purchasers of investments in the digital gold vault,” they said.
“Retail investors rely on sales representatives to clearly explain products, present accurate information and answer their questions,” Enforcement Director Joe Rotunda said. “Unlike registered sales agents, unregistered multilevel marketers are not subject to a state background review, do not have to successfully pass examinations and are not supervised by a registered dealer. The regulations that have traditionally protected retail investors simply do not apply to unregistered multilevel marketers.”
Enforcement Director Rotunda claimed he reached out to Billionico Academy Sales Director Christian Cruz Riander before the action was taken, with Riander allegedly declining to speak about his work, saying “these days my schedule is packed. Perhaps another time.”
While Texas has come down hard on Billionico Academy for their illegal digital gold vault business, the state has shown itself to be among the most welcoming jurisdictions in the United States for gold investment.
The state operates its own gold depository and encourages citizens to buy and store gold with them. “The Texas Bullion Depository is an agency of the state of Texas, making it the only state-administered and audited vaulting facility in the nation,” the website claims.
The Texas Bullion Depository offers liquidity on the scale of COMEX and 100% all-risk insurance through Lloyd’s of London, and was created to eliminate Counter-Party Risk for Texans’ gold investments. The Depository is located on a 10-acre campus in Leander, Texas, just north of the state capital of Austin.
