October 10, 2024 – Securities Commissioner Travis J. Iles filed an Emergency Cease and Desist Order against Darrell Porter, a Minister from Killeen, Texas, and Eric Ture Muhammad, a purported “Wealth Minister” from Fairburn, Georgia. The order accused Porter and Muhammad of illegally and fraudulently offering investments tied to digital asset arbitrage trading that purportedly pay lucrative returns – with a principal investment of 10,000 USDT purportedly earning 3,600 USDT per month or 43,800 USDT after one year.
The digital asset arbitrage trading investments were purportedly issued by Trage Technologies Limited, an offshore firm organized in the Republic of the Marshall Islands. The firm is accused of concealing key information from clients, including the qualifications of its principals, and it is allegedly offering its products through an illegal multilevel marketing program that pays “dividends” to compensate agents.
“On one hand, bad actors are leveraging widespread interest in cutting-edge technology to develop fraudulent schemes,” said Commissioner Iles. “On the other hand, bad actors are using multilevel marketing and other traditional sales practices to quickly and efficiently pitch the cutting-edge products to clients. Taken together, the modern and traditional tactics combine to greatly increase the threat to retail investors.”
Trage Technologies, Porter and Muhammad are also allegedly touting the legitimacy of Trage Technologies. For example, they are claiming the firm is registered with the United States Securities and Exchange Commission. However, according to the order, neither Trage Technologies nor its securities are registered with the agency.
Instead, Trage Technologies is allegedly merely claiming it satisfies the criteria set forth in Regulation D, Rule 506(c). “In many ways, Regulation D is essentially the opposite of registration,” said TSSB Enforcement Director Joe Rotunda. “Sales of securities made pursuant to Rule 506(c) are necessarily sales of unregistered securities – not registered securities. However, issuers are afforded safe harbor under Rule 506(c) when they limit all sales to accredited investors.”
The order alleges that Trage Technologies fails to qualify for safe harbor pursuant to Regulation D, Rule 506(c). It specifically alleges, for example, that the firm fails to satisfy relevant criteria because it is not limiting sales to accredited investors and it is not taking reasonable steps to verify the accreditation of investors. “In other words,” said Enforcement Director Rotunda, “Trage is accused of not only falsely claiming it is registered with the US SEC but also of falsely claiming it qualifies for safe harbor treatment pursuant to a rule promulgated by the US SEC.”
According to the order, Porter and Muhammad are multilevel marketers that previously promoted products on behalf of various other companies. These companies allegedly include GSB Gold Standard Bank LTD dba GS Partners, a firm named as a respondent in Order No. ENF-23-CDO-1879. According to the order, Muhammad has also been promoting products issued by Billionico Academy, an organization named as a respondent in Order No. ENF-23-CDO-1882.
The parties are afforded 31 days to challenge the order.
Contact: Enforcement Director Joe Rotunda at [email protected] or 512-305-8392
