- Florida regulators are investigating Karatbars, a German company that’s been promoting a token tied to a Miami “crypto bank” without any banking license in the state.
- Karatbars previously issued a cryptocurrency purportedly backed by gold, but CoinDesk has been unable to verify the existence of the mine the company says produced the gold.
- Before it entered the crypto space, Karatbars sold gold products online through an affiliate marketing system that regulators in three countries warned the public to avoid.
- CoinDesk interviewed three of Karatbars’ current “affiliates,” who said they passionately believe in the company and its tokens.
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.
“Karatbars is not licensed as a bank with the OFR,” the agency’s director of communications, Katie Norris, told CoinDesk. “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 CoinDesk’s requests for comment. We will update the article if we hear back.
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.