Bitcoin Latinum, the cryptocurrency prominently promoted by poker superstar Phil Hellmuth, is again facing legal difficulties after being sued in California last week. The lawsuit, filed against Bitcoin Latinum corporate entity GIBF GP, Inc., Bitcoin Latinum founder Donald Basile, and up to 10 "John Doe" co-defendants, alleges various forms of securities fraud in connection with the Bitcoin Latinum startup.
In the lawsuit, Californian Arshad Assofi alleges that Basile and Bitcoin Latinum defrauded him of more than $15 million in investment funds through false claims by Basile regarding the Bitcoin Latinum project. The project has been prominently promoted inside the poker and gambling worlds by 16-time WSOP bracelet winner Phil Hellmuth, who is a paid endorser of the crypto company and was previously listed in at least one investment database as being an angel investor in the project.
Hellmuth and Bitcoin Latinum founder Basile are friends and reasonably close neighbors, both living in Palo Alto, California. Hellmuth has appeared with Basile at Bitcoin Latinum promoting events as far away as Miami and has referred to Basile as "my guy" on Twitter:
Lawsuit describes string of false claims and broken promises
Assofi's lawsuit alleges a string of actionable misdeeds by Basile and other Bitcoin Latinum insiders. The alleged torts include:
- Unregistered offer and sale of securities in violation of U.S.'s Securities Exchange Act
- California state law violation for unregistered offer and sale of securities
- Securities fraud in violation of U.S.'s Securities Exchange Act
- Unregistered dealer/broker under definitions of U.S.'s Securities Exchange Act
- California state law securities fraud violations
- Recission
- Fraud
- Conversion
- Violation of penal codes
Assofi also asserts that Basile, in asking for investment funds, made numerous unsupported claims and broke many promises while converting money for personal use. In a June 2021 fundraising meeting, Basile allegedly made these claims to Assofi. From the filing:
- Bitcoin Latinum was a project that received $20 million from the producers of Star Trek;
- Bitcoin Latinum would be a "hard fork" from Bitcoin;
- Bitcoin Latinum would be interchangeable with Bitcoin;
- The Bitcoin Latinum project would receive $50 million from big companies;
- An investor from Dubai would put in $100 million;
- The Dubai investors would open 100,000 ATMs for Bitcoin Latinum by the end of 2022;
- Bitcoin Latinum was the only insured cryptocurrency;
- The Bitcoin Latinum project was "fully insured" by Marshall McKellan;
- The Latinum coin and tokens issued to Plaintiff would be trading in early to mid-November 2021, and all coins would be issued, no lockup;
- All traded money will be stored in a vault;
- Every time there was a transaction, the transaction fee went into Latinum; 10% goes in and builds it up; and
- Coin will be released right away. There was no "lock up" for investors. Thus, as soon as it goes live, one could invest it, sell it and recoup the investment.
Instead, according to Assofi's claims, the truth of the project was far different. Basile's company actually has no direct connection to Bitcoin, the original cryptocurrency. Instead of the launch of the main Bitcoin Latinum coin, Basile and GIBF instead launched a "pre-sale" coin and had it listed on multiple crypto exchanges under the "LTNM" symbol. The actual Latinum coin has yet to be minted and has been repeatedly delayed since 2021, according to Assofi, thus preventing anyone from cashing out their initial investments. Meanwhile, the pre-sale coin has dropped more than 90% from its highest traded value.
The lawsuit also asserts that Bitcoin Latinum acts as a security in the way it raises investment funds, which would bring it under rules of the U.S.'s SEC. Last January, parent company GIBF filed a registration statement with the SEC. The S-1 statement declared that "'[a]s of the date of this Prospectus, the [cryptocurrency wallet] supports [25 specifically enumerated] Cryptocurrencies and other Digital Assets.' The enumerated cryptocurrencies and other digital assets expressly include Bitcoin, Ethereum, USD Coin and Tether, among others." The Bitcoin Latinum coin itself was not listed among the cryptocurrencies for which the planned trading was disclosed to the SEC, an omission which Assofi's suit describes as "noteworthy in its absence."
Despite Bitcoin Latinum's attempts to piggyback on Bitcoin's fame, it has no direct connection to the original cryptocurrency. Instead, the company's plans as touted to Assofi appear to have included the creation of a massive global network of kiosks through which other prominent cryptocurrencies could be traded, purchased, or sold.
Assofi ended up sending Basile $15,555,329 in a series of investment payments, including several made in cash. Assofi's lawsuit is the second lawsuit filed against Basile and Bitcoin Latinum this year. In February, three people sued the company in Michigan over several hundred thousand dollars sent to Kevin Jonna, an investment seller allegedly working on Bitcoin Latinum's behalf. The plaintiffs in that case allege similar securities fraud, no token issued to date, and a failure to be refunded their initial lawsuits. The Michigan "Jonna" lawsuit (with experienced poker semipro Kevin Jonna as a defendant) is ongoing and is cited in Assofi's current action, which asks for trebled damages, punitive damages, and all related court expenses.
Racist-tinged taunts allegedly made from Bitcoin Latinum account to Assofi
One of Assofi's assertions is that not only did Basile and Bitcoin Latinum pocket Assofi's millions, thay also gloated about the theft while mocking Assofi's ethnic heritage. The lawsuit asserts, "The plain reality of what happened with Assofi's invested funds was candidly acknowledged by GIBF's head of social media who wrote Assofi the following from Bitcoin Latinum's official account:"
The lawsuit does not identify Bitcoin Latinum's director of social media by name. Assofi does add that the according to his research, blatant theft and conversion is exactly what Basile did. The filing continues, "Assofi understands, both from statements above and from industry conversations that the above is exactly what Basile did with his funds, fund a lavish lifestyle built upon his fraud. This action seeks to redress these acts."
Hellmuth appeared at gaudy Miami gala
Hellmuth has appeared at several events in connection with Bitcoin Latinum, including at the "celebrity-packed" GENESIS, a crypto gala held at the exclusive Mr. Jones club in Miami last December. The "celebrity-packed" gala was sponsored by Bitcoin Latinum. Besides Basile and Hellmuth, attendees included TapStats' Sensei Paul Misir MMA star Jorge Masvidal, Paige VanZant, and Anthony Pettis, along with what a Yahoo! feature described as "Wall Street leaders, crypto whales, several founders of the top cryptocurrencies, and over 40 leading Instagram model influencers."
The GENESIS gala was held during Miami's Art Basel festival, with Grammy winner Quavo and Grammy-nominated Tory Lavez performing at the event. Assofi's lawsuit cites the GENESIS bash was just one of several ways in which Basile lavishly spent or misappropriated investors' funds for other uses. The bash "dominated the Art Basel party scene," according to Yahoo!, and was specifically tied to Bitcoin Latinum's partnership with Unico in launching UnicoNFT, an NFT marketplace that aims to provide access to NFT sales and trading in other than Ethereum or similarly-designed cryptocurrencies. (GENESIS appears to be separate from the Genesis crypto platform also in recent news.)
Hellmuth also faces another legal situation connected to his own investments. In June, he was among several defendants named in a lawsuit filed in Georgia in August against DFS company Sideprize, LLC, alleging that Sideprize offers illegal gambling services in that state. The lawsuit was filed by infamous "PokerHaus" attorney Mark T. Lavery and was the second action targeting Sideprize, though an earlier lawsuit filed in Lavery's home state of Illinois was tossed out last month. Lavery has a long animosity toward some forms of online gambling, alleging that some of these services had also targeted underage gamblers, and he had also previous sued the original PokerStars and Full Tilt Poker operations.
Featured image source: Haley Hintze
