A German company that claimed to raise $100 million in a 2018 initial coin offering (ICO) is being investigated by Florida financial regulators.
Karatbars International GmbH has announced plans to follow its first token sale with another one in December 2019. While the 2018 token sale was for its allegedly gold-backed KaratGold Coin (KBC), this year the company has been promoting a KaratBank Coin connected to a “cryptocurrency bank” in Miami.
The claim about a cryptocurrency bank seems to have landed the firm in hot water with the Florida Office of Financial Regulation (OFR).
“Karatbars is not licensed as a bank with the OFR,” the agency’s director of communications, Katie Norris said. “The OFR has an open investigation, and so that is all the information I can share at this time.”
Karatbars International GmbH has not responded to any requests for comment.
The Florida investigation is not the first time Karatbars has come under regulatory scrutiny. The company was founded in 2011 by German entrepreneur Harald Seiz, who still heads it.
In 2014, long before Karatbars’ first token sale, Quebec’s Financial Markets Regulator issued a warning for investors to “be cautious” about the company, which offered internet-based purchases of gold to prospective “affiliates.” Karatbars offered these buyers a commission to sign up other affiliates.
Regulators in the Netherlands and Namibia have issued similar public warnings, with the former calling Karatbars’ business a form of multi-level marketing and the latter going so far as to label it a pyramid scheme.