A gavel rests on its sounding block with a several law books and a justice scale out of fucus in the background. A cool blue cast dominates the scene. (A gavel rests on its sounding block with a several law books and a justice scale out of fucus in t
iStock

Regulators in Alberta and British Columbia, along with 32 U.S. states, are participating in a settlement with a collection of companies that sold investors a variety of digital assets in a multi-level marketing scheme. The deal aims to allow investors to get their money back.

Both the Alberta Securities Commission (ASC) and the B.C. Securities Commission (BCSC) announced this week that they have joined a settlement with a group of U.S. state authorities and an array of companies collectively known as GSPartners, including GSB Gold Standard Corporation AG, GSB Gold Standard Bank Ltd. and other affiliated companies that sold digital assets, including assets tied to a so-called “metaverse.”

In 2023, the BCSC issued a temporary cease-trade order against some of the companies that are part of the settlement, citing concerns that their activities may have breached securities rules.

The order noted that BCSC staff was concerned that the companies could have made illegal distributions, engaged in unregistered trading, and made prohibited representations to investors, among other things.

That temporary order was subsequently extended, but there haven’t been any formal enforcement allegations filed in the case. And the BCSC said that once the refund process that’s set out in the settlement has been completed, it will discontinue enforcement proceedings against GSPartners and its affiliates.

The settlement, which was negotiated by a group of state regulators and the BCSC, will allow investors to claim refunds, either in cryptocurrency or cash, representing the value of their initial deposits to the GS companies, less any withdrawals.

The investments that are covered by the settlement include a digital token that was supposedly backed by physical gold, a digital asset that purportedly represented ownership in a skyscraper, investments in a “staking pool” that was part of a metaverse known as Lydian World, and a series of so-called ‘Metacertificates.’

Investors have 90 days to make a claim under the refund process, which is expected to start Feb. 21 and end on May 22.

The ASC said it “signed onto this settlement to protect the interests of Alberta investors who made an investment with GS Partners, as it allows Alberta investors to make a claim for a refund of all investments made with them.”

The regulator also said that the companies have agreed to stop trading in Alberta, until they comply with securities law.