German Regulator Orders ‘KaratGold Coin’ Issuer to Cease Operations

The hammer is coming down again on the Karatbars ecosystem as German and South African regulators have taken separate actions over sales of a purportedly gold-backed cryptocurrency.

Germany’s Financial Supervisory Authority (BaFin) disclosed Monday that it had issued a cease-and-desist order against Karatbit Foundation on Oct. 21 for issuing its KaratGold Coin without necessary licensing in the country. 

Also Monday, South Africa’s Financial Sector Conduct Authority (FSCA) warned consumers to avoid investments offered by Karatbars International GmbH, a German firm that promotes the allegedly gold-backed KaratGold Coin.

Under the BaFin order, the foundation must “wind up [its] electronic money business” in Germany, the regulator said. 

BaFin did not respond to requests for comment by press time.

Run on the ethereum blockchain, the KaratGold Coin (KBC) is listed on about 30 exchanges including HitBTC and Yobit, with a second token, KaratBank Coin (KCB), yet to launch.

The Belize-based Karatbit Foundation is the issuer of the KaratBank Coin and manager of the Karatbank ecosystem, according to the KaratBank Coin white paper, which describes the entity as “unregulated.”

Map of the un-launched KaratCoinBank ecosystem image via KaratBank Coin’s white paper

Karatbars International did not respond to questions by press time.

Karatbars shoots back

Meanwhile, Karatbars International has denied accusations leveled in German business publication Handlesblatt, according to a company Facebook posting Tuesday and a story published Wednesday by The Guardian.

Handlesblatt reported Monday that the Karatbit Foundation is under orders to return investor funds amounting to $100 million, equivalent to the amount raised in a 2018 initial coin offering (ICO). 

Harald Seiz, CEO of Karatbars, further said in the Facebook post that the German finance regulator is mistaken in its order against the firm, basing its actions on a scam website not associated with…

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