❌ RAILBUS silences journalist

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RAILBUS Plays Dirty

Caleb Naysmith is the cofounder of Hubtas, a data platform for startup investing.

He's also a longtime journalist in the space, having written about startups for years through his blog Democratizing Finance.

Caleb recently alerted his readers to a scam, a shadow-like entity that was exploiting the crowdfunding space.

Named RAILBUS, the entity was raising funds from retail investors to bring a high-tech transportation system to life.

Caleb pointed out several glaring red flags with the offering, most notably that they weren't even registered with the SEC.

Any company that wants to raise funds from retail investors is required by law to file several documents with the SEC.

As RAILBUS failed to do this, their entire crowdfunding efforts are illegal.

Additional Irregularities Arise

• I have a suspicion that their 'employees' are not real, that the pictures are either stolen or generated by AI. I couldn't verify any of them online.

• They have an entire page devoted to the legitimacy of their company….yeah normal companies won't ever do this

• As part of their 'legitimacy' efforts, they cite a book written about the technology. When reviewing, the book has 0 reviews and is written by someone who again does not seem to exist

• When buying shares, you only need to put down a 20% deposit - again, you will never see this anywhere else

• They talk about projected share appreciation (always a red flag), and downplay the risks

A scary scenario reels in retail investors

If RAILBUS is a scam (it’s raising money illegally so you draw your own conclusions), here’s how it’s playing out:

• RAILBUS runs ads on Facebook promising revolutionary tech and amazing financial returns

• People invest money in the hopes of getting a return

• Whoever owns RAILBUS pockets the money instead of building the company

Because they're not registered with the SEC, we have no understanding of who actually owns the company, what their balance sheet looks like, and what they'll use the money for.

How RAILBUS Silenced its Dissenter

I've learned the hard way that when you write about sketchy companies, they typically go on the offensive and threaten litigation to get your content removed.

RAILBUS took a different approach, possibly because Caleb has a law degree and litigation would require the people behind this reveal themselves.

Instead, they exploited a feature on Wix to get Caleb's entire site taken down.

They issued a DMCA (Digital Millennium Copyright Act) request - claiming that Caleb's use of one of their images was a violation of their copyright.

According to Caleb, it turns out that anyone can easily submit this kind of request through an automated process and Wix will instantly take down the entire site.

To me, this is an egregious violation of freedom of speech.

It's a clear takedown of negative journalism, and because Wix customer support was slow to respond, Caleb's site was down for days following the DMCA request.

To avoid this from happening in the future, Caleb is moving his site off of Wix and onto another platform. But the damage will likely have lasting implications.

SEO is the science behind getting your webpage to rank high on the Google search results, it's how internet pages get their traffic.

It often takes a lot of time and effort for Google to realize your site is credible. Moving operations to a new domain will likely reset a lot of the work that Caleb has done to establish his positioning.

It sucks to see bad actors actively harming the space - both Caleb and I have both been litigated against by scams we've tried to illuminate.

How to avoid startup scams in the future

My advice is to stick to deals you see on Wefunder, StartEngine, and Republic. There's a very basic level of due diligence these crowdfunding portals do to ensure the companies are not scams and that they're at least properly registered with the SEC.

Staying in the confines of these sites lets you browse startups without fear of blatant scams.

There are non-portal raises powered by Dealmaker, Issuance, and others - these are fine too but because the raise is hosted on the startup's own website you have to be a bit more careful.

Always check for the company's Form C just to make sure they've registered with the SEC and are doing things right.

And if you're ever not sure - you can ask me!