The Texas State Securities Board has taken action against a decentralized lending pool that touted its ties with the Russian government. Travis J. Iles, the securities Commissioner of Texas, issued an emergency cease and desist notice to halt services related to BigWhale.io, a staking and lending decentralized finance (DeFi) protocol based on the Binance Smart Chain.
BigWhale.io claimed to offer passive income opportunities but raised concerns by making potentially false promises. The platform allegedly stated it had raised $6 million from over 2,000 investors, later claiming it had been hacked, resulting in the loss of all investor funds. According to an official release from the securities authority, the company threatened to mobilize assets within the Russian government to seek extrajudicial revenge.
The cease and desist order reveals that BigWhale.io was promoting digital asset lending investments sold through a decentralized application (dapp). The firm promised to lend these digital assets to vetted borrowers who would pay interest to BigWhale.io, which would then provide lucrative interest to its investors, offering interest rates as high as 2% per day with the option to compound yields for nearly a 500% return after 90 days.
Additionally, BigWhale used social media and online influencers to promote its dapp through a multilevel marketing scheme. The company failed to disclose its capitalization and other information related to its securities offering and refused to provide information about its principals and office locations.
Commissioner Iles emphasized the importance of transparency and avoiding offerings that operate in obscurity, as they may pose significant risks to investors. The recent audit of BigWhale.io noted behavior resembling a Ponzi scheme, as it appeared to use user deposits as rewards for others.
After announcing a hack that resulted in the loss of investor funds, BigWhale.io started threatening to use assets within the Russian government, suggesting that it could take extrajudicial actions against the perpetrator.