Two States Sanction South African Firms for Crypto Debit Card Fraud

Authorities in Texas and Alabama have issued emergency cease and desist orders to South African companies promoting a cryptocurrency credit card scheme.

According to an Aug. 14 announcement from The Texas State Securities Board (TSSB) and the Alabama Securities Commission (ASC) issued cease and desist orders simultaneously against Lance Angus Jerrard and South African companies Liquidity Gold Trust, Liquidity Gold Solution, and Liquidity Global Card Solution.

The firms and Jerrard are accused of committing fraud by promoting a product called the Liquidity Card on social media and a local Austin radio station, falsely claiming that investors have a guaranteed way to make money while staying at home during the pandemic. They reportedly said that the card was “a Mastercard that functions like a traditional debit card.”

The companies have reportedly used their ad time to state that their product would help cardholders avoid taxes by receiving and spending profits as stablecoins including USD Coin (USDC), TrueUSD Coin (TUSD) and PAX Coin (PAX).

“The prospect of guaranteed monthly income may seem like a dream come true during times of economic uncertainty,” said TSSB Enforcement Director Joe Rotunda. “Unfortunately, cryptocurrency scams typically fail to support promises of prosperity with facts and evidence. In the end, it’s often smoke and mirrors, with a technological twist.”

How the scam works

The campaign was reportedly supposed to launch in October, “with the goal of recruiting 8 million cardholders in 36 months,” the announcement stated.

The scheme works by recruiting new members and getting them to invest at least $1,150 in 1 or more of 8,400 portions in Liquidity’s global project partnership. Investors would then allegedly be able to earn residuals derived from fees paid by Liquidity cardholders.

The TSSB’s announcement stated:

“The Liquidity companies are projecting lucrative cashflow, claiming investors may receive $1,516.72 per portion per month after 18 months and $5,008.62 per month after 24 months. The profits are purportedly guaranteed. According to the order, the Liquidity companies are even offering investors a 100% written money back guarantee.”

According to the cease and desist order, these claims are fraudulent. In addition, all three Liquidity companies and Jerrard are not registered to sell securities in Texas. The TSSB reported they had concealed essential information to prospective cardholders on the risk associated with the scheme, and how they would be able to get a return on their investment.

Jerrard and the associated companies have 30 days to challenge the cease and desist order.