Texas State Securities Board’s Newest Report Leads to 16 Enforcement Orders Against Crypto Scams
The Texas State Securities Board is the watchdog for financial scams in the state, and they recently published an annual report that revealed cryptocurrency to be one of their main priorities this year. The scams that have faced this industry, at least for 2018, have passed the traditional financial products, like stocks, futures, and others.
The new enforcement report from TSSB shows that there were $13.2 million in civil monetary penalties during the course of the year. Ultimately, the watchdog submitted 16 administrative orders, which involved a collective total of 60 individuals and entities.
One of the main points of focus for the TSSB was ICO campaigns, which are used to help with the sale of digital tokens in blockchain startups and similar firms. BitConnect was a prime example cited in the report, which was recently accused of stealing millions of dollars from the individuals that participated in their ICO.
The regulator stated,
“The emergency action effectively shut down the scam, as BitConnect almost immediately lost 99% of its market capitalization of $2.6 billion.”
Along with these types of cases, the watchdog has also been investigating companies that will be subjected to compliance laws and registration policies, which directly are tied to the federal securities laws. The report added,
“None of the individuals or firms were registered to sell securities in Texas.”
The agency recently warned the locals about scammers that are approaching investors about their BitConnect losses, claiming that they can help for $250. The notice, which the scammers labeled “BitConnect update,” says that the firm plans to reimburse 35% of the investment received. So far, BitConnect has used celebrities in their scam as well, leading to the issuance of two separate cease-and-desist letters from the agency. In August last year, the Indian head of the company was arrested last year in August.
In the annual report, there is additional information about recent enforcement, which includes the actions taken against hybrid schemes. The report concluded,
“Some international cryptocurrency promoters even found sales agents in the oil patch. According to a Nov. 6 emergency action taken against an Australian promoter of cryptocurrency mining contracts, the firm’s sales agents included members of the West Texas Oilfield Cloud Miners Club in Midland.”
Considering that many states are developing regulations for cryptocurrency within their own jurisdiction, Texas has been one of the more active participants. They have also joined the work of federal authorities, seeking out action against companies that fail to properly register their services and companies.