Verra, the leading standards setter for the voluntary carbon market, has announced the completion of quality control reviews for 22 of the 26 cookstove projects developed by C-Quest Capital. Launched on 27 June 2024, the reviews have determined that 5,004,915 Verified Carbon Units (VCUs) were issued in excess of the correct amounts. As a result, CQC is required to compensate for these excess issuances, leading to the cancellation of the same number of VCUs.
Verra has stated that a project-by-project breakdown of the reviews is available, with four projects still under assessment. The 22 reviewed projects have now been removed from the hold on Verra’s registry.
This announcement comes amid a broader investigation into CQC by the US Securities and Exchange Commission (SEC), which recently settled charges against the company for data manipulation and fraud related to its carbon credit projects. The SEC found that CQC had engaged in a scheme to artificially inflate carbon credit production figures, misleading investors in a $250 million fraudulent offering.
According to the SEC, CQC’s deceptive practices began in the spring of 2022, when the company marketed its equity to institutional investors. The scheme, orchestrated by former senior personnel, included manipulated data in offering materials, financial projections, and due diligence documents, ultimately leading to the sale of $250 million worth of CQC shares in early 2023.
CQC has admitted to the SEC’s allegations and agreed to a cease-and-desist order for violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.
The SEC’s investigation is ongoing, led by its Complex Financial Instruments Unit in collaboration with the US Attorney’s Office for the Southern District of New York, the FBI, and the Commodity Futures Trading Commission.
Verra’s completion of the quality control reviews and CQC’s compliance with compensation requirements highlight the importance of integrity in the carbon market, as regulatory bodies increase scrutiny on fraudulent activities and misrepresentation in the carbon credit industry.