Crypto Hub Finance Operates Illegally, SEC Warns Investors of Ponzi Scheme | BitPinas

In an urgent public advisory, the Commission has announced that CRYPTO HUB FINANCE, a group soliciting investments through social media, is not legally authorized to conduct such activities.

Crypto Hub Finance investment scheme

Reports obtained by the Commission reveal that the entity has been inviting the public to invest in their schemes via their Facebook group and official website. CRYPTO HUB FINANCE offers investment plans starting from a minimum of 50 BUSD (approx. ₱2,786.38), promising up to 2% daily returns for 75 days, 5% affiliate bonus, and an additional 5% cashback.

Crypto Hub Finance Subject of Web3 Community Scrutiny

Early last May, Crypto Hub Finance was the subject of intense scrutiny from the web3 community. This began with a social media post and an article by thought leader Luis Buenaventura, author of Cryptoday and regular contributor at BitPinas.

Buenaventura noted problems with the Crypto Hub Finance code and highlighted that the developers have not renounced their ownership in the smar contract.

“Since the owner has the private keys of the contract, renouncing ownership prevents them from taking control of the funds that are secured within it. But because the CHF team never did that, they could remove funds as easily as transferring tokens thru Metamask,” Buenaventura said on Cryptoday.

In a succeeding newsletter, Buenaventura noted how his posts were bombarded with ” virulent comments ranging from childish name-calling to accusations that I don’t know anything about crypto.” Buenaventura is also a published author of two books related to cryptocurrency and blockchain – Reinventing Remittances with Bitcoin and The Little Bitcoin Book: Why Bitcoin Matters for Your Freedom, Finances, and Future.

Crypto Hub Finance lacks registration and license

The Commission noted that CRYPTO HUB FINANCE’s operation resembles an “investment contract,” a type of security where money is invested with the expectation of profit from others’ efforts. Under the Securities Regulation Code (SRC), these securities must be duly registered with the Commission, and the related entities need the appropriate license and registration to offer such securities to the public.

However, the Commission confirmed that CRYPTO HUB FINANCE is not registered as a corporation or partnership and operates without the necessary license and authority. This lack of registration and authority makes their activities of soliciting, accepting, or taking investments from the public and issuing investment contracts illegal under Section 3 of the SRC.

Ponzi scheme characteristics of Crypto Hub Finance

Moreover, the Commission has identified characteristics of a Ponzi Scheme in CRYPTO HUB FINANCE’s operation. This kind of scheme uses funds from new investors to pay “fake profits” to earlier investors. Such structures predominantly benefit the top recruiters and early risk-takers, proving detrimental to later members if there’s a scarcity of new investors.

SEC advises the public vs Crypto Hub Finance

The Commission highlighted that securities in the form of investment contracts using a Ponzi Scheme are not registrable securities. The Commission will not issue licenses to entities engaged in such fraudulent and unsustainable business or scheme.

Consequently, the public has been advised not to invest or to stop investing in the schemes offered by CRYPTO HUB FINANCE and similar entities. People should also exercise caution when dealing with individuals or groups soliciting investments or recruiting investors on behalf of CRYPTO HUB FINANCE.

Those found guilty of acting as salesmen, brokers, dealers, or agents for CRYPTO HUB FINANCE could face a maximum fine of Five Million Pesos (₱5,000,000.00) or imprisonment of Twenty-One (21) years or both, under Section 28 of the SRC. Furthermore, their names will be reported to the Bureau of Internal Revenue (BIR) for assessment of appropriate penalties and taxes.

The Commission urges the public to report any information about investment solicitations by individuals or groups acting on behalf of CRYPTO HUB FINANCE through their email at epd@sec.gov.ph.

This article is published on BitPinas: SEC Warning: Crypto Hub Finance Operates Without Authorization

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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• Source: https://bitpinas.com/regulation/sec-advisory-crypto-hub-finance-philippines/