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

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Editing and Additional Reporting by Nathaniel Cajuday

  • The SEC has issued an advisory against Crypto Hub Finance, an entity that promises up to 2% daily returns for 75 days, a 5% affiliate bonus, and an additional 5% cashback, and was the subject of the community for the past weeks.
  • According to the Commission, their investigations found out that Crypto Hub Finance is an unlicensed and unregistered entity, and that it possesses a ponzi scheme.
  • Hours after this article was first published by BitPinas, Crypto Hub Finance posted an update, including its activities for the rest of 2023.

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

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Crypto Hub Finance And Its Investment Scheme

On its website, Crypto Hub Finance claims to be the platform where cryptocurrency expertise and financial freedom meet, adding that the existence of the platform and its $HUB token, “we believe that we have the solutions in place that are fundamentally embedded on the concepts of transparency and sustainability.

Photo for the Article - Crypto Hub Finance Operates Illegally, SEC Warns Investors of Ponzi Scheme

It offers investment plans starting from a minimum of 50 BUSD (approx. ₱2,786.38), promising up to 2% daily returns for 75 days, a 5% affiliate bonus, and an additional 5% cashback.

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Crypto Hub Finance as the Subject of Web3 Community’s Scrutiny

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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 smart contract. The research was prompted by prominent members of the web3 community, including Gelo Wong and Paul Soliman.

“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 is an Unregistered and Unlicensed Entity, SEC Attested

According to the Commission, the reports they obtained revealed that the entity has been inviting the public to invest in its schemes via its Facebook group and website.

Crypto Hub Finance’s operation also resembles an “investment contract,” a type of security where money is invested with the expectation of profit from others’ efforts, as per the regulatory agency. 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, SEC 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.

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Crypto Hub Finance Possesses Ponzi Scheme, SEC Declared

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 ‌top recruiters and early risk-takers, proving detrimental to later members if there’s a scarcity of new investors.

SEC Advises Public to Stop Communicating with Crypto Hub Finance

The SEC highlighted that securities in the form of investment contracts using a Ponzi Scheme are not registrable securities, highlighting that it will not issue licenses to entities engaged in such fraudulent and unsustainable businesses or schemes.

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.

What’s Next for Crypto Hub Finance?

Hours after BitPinas reported this advisory, Crypto Hub Finance posted on its Facebook group, announcing that members who will spread out negativity will be kicked out of the group.

The post also stated that the entity’s whitepaper will be updated on July 30, this is despite receiving an advisory from the SEC.

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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.