Financial regulators’ fundamental duty lies in overseeing the financial marketplace, including action against unauthorized entities and fraudulent activities. Regulatory powers vary across different jurisdictions. In the U.S., agencies like the SEC possess the authority for direct intervention, while European regulators do not have analogous capabilities. Consequently, private entities such as BehindMLM, FinTelegram, or FinCrimeObserver play a pivotal role in alerting the public about illicit market players. These entities often face Strategic Lawsuit Against Public Participation (SLAPP) actions from the legal teams representing such market players.
A quintessential case is the crypto MLM scheme GSPartners, managed by Josip Heit, which exemplifies how legal firms safeguard their clients engaged in illegal operations from public admonitions or critical reports. Representing Josip Heit is the Berlin-based law firm IrleMoser, specializing in media and copyright law, led by partners Ben Irle and Christian-Oliver Moser.
In recent years, platforms like BehindMLM and FinTelegram have consistently issued cautions regarding GSPartners. This MLM scheme has been marketing financial products under the guise of cryptocurrencies without necessary regulatory approvals. It’s noteworthy that a significant majority of MLM schemes are often categorized as Ponzi schemes.
Regulatory bodies in Canada have issued advisories against GSPartners. BehindMLM and FinTelegram have not only reported these but also issued their own warnings.
Despite these public advisories, IrleMoser’s legal team has initiated actions against such reports. They have threatened BehindMLM and FinTelegram with legal proceedings and injunctions. It’s evident from these public warnings that the legal representatives were aware of their client’s lack of licensure in any regulatory regime.
Legal representatives are mandated to conduct Know Your Customer (KYC) checks, which should reveal whether their client’s operations necessitate regulatory licensing, an aspect evidently missing in this case. This should have become apparent following the initial regulatory warnings.
IrleMoser proceeded against BehindMLM and FinTelegram despite these known regulatory alerts, erroneously claiming that the platforms’ critiques and warnings were defamatory, seeking court injunctions to halt factual reporting. This action effectively inhibited investor warnings.
An additional complication arises with U.S. regulators, traditionally seen as stringent, issuing Cease and Desist Orders against Josip Heit personally and his controlled MLM schemes like GSPartners.
In response, GSPartners ceased operations in the U.S. and established a new branch called GSPRO (https://gspro.network), operated by a Georgia company (Eastern Europe). This platform, too, lacks regulatory permissions, which are essential for offering financial products, including cryptocurrencies, in any jurisdiction where customers are solicited.
The strategy to suppress critical reporting has a legal dimension known as a Strategic Lawsuit Against Public Participation (SLAPP). SLAPP attacks are deemed illegal in most jurisdictions, and the role of legal representatives in such campaigns warrants scrutiny, especially concerning their potential accountability in facilitating SLAPP actions.
SLAPP campaigns in the financial sector impede investor information and warnings, enabling illegal financial service providers and fraudsters to target and exploit consumers.
