Citing several claimed breaches of the agreement made by GSB and owner Josip Heit, Texas has withdrawn from the GSB settlement.
I won’t excuse Mr. Heit from his most recent scams. Your customers, who are still in business, have broken the term sheet several times.
See if you can look in the mirror and let’s litigate.
Texas is over because of your infractions. The term sheet was broken by all of you.
Well done, and with sincere regard,
Commissioner of Securities Travis J. Iles
State Securities Board of Texas
In a submitted First Amended Notice of Hearing, the Texas State Securities Board (TSSB) describes purported GSB settlement breaches.
According to TSSB’s notice filing dated March 11th, the Enforcement Division started identifying term sheet violations by Respondent Heit and GSB Germany after the term sheet was executed. The Enforcement Division accused Respondent Heit and GSB Germany of purposefully, wilfully, or knowingly withholding and/or misrepresenting information used for and relied upon in the term sheet.
A written agreement outlining the conditions of the GSB settlement is referred to as the “term sheet.”
In accordance with Paragraph 16 of the term sheet, the Enforcement Division started informing Respondent Heit and GSB Germany of their noncompliance with the term sheet and giving them a chance to correct the infractions.
Despite receiving notice, Respondent Heit and GSB Germany did not correct numerous term sheet violations, including important clauses that required them to take action to guarantee the successful return of all deposits—less withdrawals—through the claims procedure.
An email interaction between Heit’s lawyers and Travis Iles, Texas’ Securities Commissioner, is described in an email exhibit included with the TSSB’s notification filing.
The February 19, 2025, email from Iles to Heit’s lawyers discloses “new requirements” from GSB; [TSSB] has received and is replying to your February 18, 2025, email.
Respondents’ request that the TSSB and other participating agencies support additional standards not included in the initial term sheet is also being addressed by the TSSB.
Beyond being let down and unimpressed, take into account the source and their customers.
We can only rely on Iles’s disclosures since the email that GSB’s lawyers gave TSSB on February 18th is not submitted as an exhibit.
Heit (right) has made additional requests, one of which is to prevent GSB victims from talking about their involvement in the settlement under penalty of legal action.
If these new conditions are put into place, Texans who choose to submit claims will not be able to seek further relief, even if they only get a small portion of the principle that is allegedly due to them.
A nondisclosure clause included in the new requirements would essentially prohibit Texans from discussing the settlement in whole or in part, and they might even be held legally responsible for posting on social media or talking to friends and family.
Regarding the demand that the TSSB and participating countries support or accept these new parameters, we recognise that respondents have “drawn a line in the sand” and are prepared to “die on this hill.”
It should come as no surprise that TSSB rejected GSB’s “new requirement.”
The additional criteria are just not something we can support or agree to.
These are unnegotiated clauses that could unnecessarily deny Texans full financial relief while simultaneously imposing liability on Texans who would otherwise be exercising their First Amendment rights and Article 1, Section 8 of the Texas Constitution’s Bill of Rights.
We cannot support a new process that uses the potential for lawsuit as a rod and the chance of financial recovery as a carrot.
Regarding certain term sheet infractions, Iles states: “We understood that the agency and the respondents would comply with the requirements set forth in the term sheet when the TSSB executed it.”
We have since discovered that our comprehension was inaccurate. Despite the agency’s compliance with the Term Sheet, several of its requirements were not followed by the responses.
These problems, which include but are not limited to the following, have been communicated to you:
Iles continues by bringing up GSB’s failure to maintain and deliver information relevant to Texas GSB investors, quoting Joe Rotunda, Enforcement Director of the TSSB.
Even though we recognised that your clients might not have kept all of the documentation pertaining to their interactions with Texans, they agreed to give the TSSB all of the information that Texans could have gathered when opening accounts with respondents, along with their physical addresses, cryptocurrency wallet addresses, and details about the kinds and quantities of digital assets that were given to, received from, and owed to them.
Even though all of the information seems to be presently accessible to your customers via associated sites, many Texans were not given this information, and other Texans were not given any information at all.
Rotunda asserts that he personally joined and contributed to GSB as part of the TSSB’s probe of the company. Regarding his investor account, Iles observes inconsistencies between his records and the information that GSB sent to TSSB.
I successfully completed KYC and established an account with GSB Gold Standard Bank LTD dba GS Partners while the TSSB was looking into your customers. I also placed funds into the wallet address that GS Partners gave me as part of my study, starting in October 2023 and ending in December 2023.
I never took money out or made money from my transactions.
However, the respondents gave the TSSB documents demonstrating that I was unable to take part in the claims procedure despite having deposited assets worth $203.69, withdrew assets worth $690.69, and made profits worth $487.00 (more than double my investment).
This implies that the investor data that GSB gave to authorities in North America could be false.
The data submitted to the TSSB in accordance with Term Sheet Paragraph 6 is not only lacking information. The information is inaccurate and untrustworthy, and the TSSB cannot utilise it to guarantee that Texans will really get their deposits back when the claims process is over.
Rotunda contends that TSSB cannot get in touch with every customer living in Texas to inform them that they would not be eligible for recovery if they do not submit a timely claim within a 90-day deadline as GSB is giving “erroneous and unreliable” data, which is against the Term Sheet.
Paragraph 7, which typically mandates the posting of specific information pertaining to the claims procedure on any relevant websites, metaverses, or online platforms under [GSB’s] control, is the subject of another alleged Term Sheet breach.
Respondents were also required to create “a list of the homepages or all websites, metaverses, or online platforms under their control or with which they are affiliated” and to “add any additional websites, metaverses, or online platforms requested by the Working Group, if any,” according to paragraph 7.
The North American regulators that have agreed to take part in the GSB settlement are referred to as the “Working Group.”
Following receipt of a list of “websites and platforms” from GSB, TSSB informed respondents that the list was dreadfully incomplete and asked that more websites and platforms be included that were within the respondents’ control.
The notice was not disseminated via the desired channels, and the requests were denied.
Additionally, it is claimed that GSB neglected to provide written notice to victims in Texas.
Requiring respondents to “send a written communication to clients in the Settling Jurisdictions by email that clients should coordinate with the Claims Administrator to withdraw all assets from their Respondent-hosted accounts through the Claims Process,” paragraph 9 also addresses client notification.
We have, however, spoken with customers who did not get the required email warning. Their experience aligns with what I have experienced.
Rotunda provides instances of bankruptcy involving GSB-affiliated firms, notwithstanding Heit’s “representations of solvency” made during settlement talks.
If the TSSB finds that respondents purposefully, deliberately, or wilfully suppressed or misrepresented facts used for and based upon in the Term Sheet, paragraph 17 of the Term Sheet permits the pursuit of all remedies.
Since signing the Term Sheet, the TSSB has discovered on its own that some of the respondents under Mr. Heit’s control were dissolved prior to Mr. Heit signing the Term Sheet on their behalf.
Mr. Heit represented GSB Money LTD, and the other respondents were “entities, brands, or platforms which, during all or part of the time period from at least 2021 to November 16, 2023, were active and controlled by Josip Heit.” In actuality, GSB Money LTD (UK) was dissolved on or around July 6, 2021, which is more than three full years before it executed the Term Sheet.
In addition, we found that despite the Term Sheet’s claims of viability, GSB Gold Standard Pay KB (Sweden) declared bankruptcy a little over two months after the Term Sheet was executed.
The sixth reported GSPartners reboot, which includes DAO1 and its linked “Apertum blockchain,” is also mentioned. We relied on your clients’ claims that customers in the US and Canada would not be able to access items via Apertum and DAO1.ai.
We have been talking about this issue since November 2024, when the TSSB independently discovered that Mr. Heit and other parties might be launching DAO1.ai, a platform that claims to use all-in-one smart wallet technology linked to payment solutions, stocks, commodities, real estate, cryptocurrencies, and AI analysis, and Apertum, a proprietary blockchain allegedly constructed as a subnet of the Avalanche blockchain.
DAO1 is intended to be prohibited to residents of North America since it is a continuation of the investment scam that began with GSPartners.
But as you may be aware, I have been researching DAO1.ai, created an account there, and linked my defi wallets to the website.
Earlier this month, the parties moved tokens distributed on the Apertum blockchain to my wallet, despite the fact that I failed KYC.
The parties started a decentralised token exchange on the Apertum network yesterday.
Using an IPv4 address that resolved to Austin, Texas, I was able to access and link my wallet to the decentralised exchange without the need for a VPN.
Additionally, I was able to exchange tokens on the Apertum blockchain and interact with the DEX.
Rotunda also examines the marketing promises made by GSB about DAO1—specifically, decentralization—and how they relate to Apertum;
We are still looking into potential Apertum and DAO1.ai offers in Texas, but the information and proof we have found so far have us quite worried.
According to this data, even if some customers seem to be able to [buy] goods that may provide profits linked to mining incentives, the blockchain could not be using a proof-of-work consensus process.
The parties seem to be able to unilaterally burn specific tokens, even when they are allegedly transferred to a third-party defi wallet that has not granted permissions through a smart contract interaction. It also looks like the blockchain might employ a proof-of-authority consensus mechanism, which, if accurate, could make the Apertum blockchain the exact opposite of a decentralised network.
The last statement implies that, with or without consent, GSB and Heit are able to remove Apertum token balances from third-party investor wallets.
Iles ends by saying, “We understand the settlement is terminated given that respondents are demanding the imposition of new requirements that harm Texas and knowing that respondents are willing to die on this hill” and have “drawn a line in the sand.”
From April 14 to April 17, there will be a hearing on TSSB’s first GSB securities fraud enforcement action.
Over “900 exhibits” and “several hundred records relating to Mr. Heit, as well as the alleged owners … such as Kristina Heit and Ulf Lammers,” according to the TSSB, would be presented during the hearing.
It is still unclear whether other “Working Group” regulators will be affected by Texas’ withdrawal from the GSB settlement.
Texas is now the only member of the Working Group to withdraw, but I don’t see the settlement moving forward in good faith based on false investor data.
I have a suspicion that the result of the TSSB hearing will influence whether other regulators in the Working Group go on if we don’t hear anything new before April 14.
