The Texas State Securities Board has taken action to halt the operations of BigWhale.io, a decentralized lending pool, after it touted its connections with the Russian government. In response, Travis J. Iles, the securities Commissioner of Texas, issued an emergency cease and desist notice to put an immediate stop to the services offered by BigWhale.io.
False Promises and Fraudulent Activities
BigWhale.io, a staking and lending decentralized finance (DeFi) protocol based on Binance Smart Chain, claimed to provide passive income opportunities. However, the platform has come under scrutiny for potentially making false promises to investors. It allegedly raised $6 million from over 2000 investors and then suffered a hack that drained all investor funds.
“It is now threatening to mobilize assets within the Russian government to pursue extrajudicial revenge,” an official release from the securities authority said.
In line with the cease and desist order, BigWhale.io has been promoting digital asset lending investments through a decentralized application (dapp). The company promised to lend these assets to vetted borrowers, who would then repay the borrowed funds with interest to BigWhale.io. This interest would be used to provide lucrative returns to the investors.
“[Interests were] as high as 2% per day with the option to compound yield and earn a return of nearly 500% after a term of 90 days,” stated the release.
Furthermore, BigWhale.io engaged in a multilevel marketing scheme, leveraging social media and online influencers to promote its dapp. The individuals involved in the marketing campaign were promised significant compensation.
Failure to Disclose Vital Information and Red Flags
BigWhale.io failed to disclose important details regarding its capitalization and securities offering. Additionally, the company refused to provide information about its principals and office locations. This lack of transparency raised concerns among regulators.
“Concealing the identity of persons entrusted with money is an enormous red flag,” Commissioner Iles wrote.
An audit conducted recently raised further suspicions about the operation of the DeFi lending pool. The audit suggested that BigWhale.io may be using user deposits as rewards for other participants, closely resembling a Ponzi scheme.
Following a reported hack on October 3rd, where investor funds were lost, BigWhale.io resorted to threatening the use of assets within the Russian government, hoping that the responsible party would respond.
