Texas Issues Emergency Cease and Desist Orders Against Three ICO Projects

The Texas State Securities Board (TSSB) has issued emergency cease and desist orders against three ICO/cryptocurrency projects soliciting investors in Texas: Coins Miner Investment Ltd., DGBK Ltd. (DigitalBank) and Ultimate Assets LLC.

All three projects allegedly used misleading information to promote their projects, and none are licensed to sell securities in Texas.

According to the securities board, Coins Miner has been circulating emails falsely claiming that its affiliate “Ana Julia Lara” is an employee at the San Francisco-based Coinbase crypto exchange.

A purported photo of “Ana” with the president of Ripple is attached in emails, but the photo in fact shows the Ripple executive standing with the president of Cointelegraph Media Group, Maria Jones.

The TSSB also says that Coins Miner superimposed one of their logos into a video of a journalist from Fortune Magazine discussing cryptocurrencies. Both Fortune and the journalist allege unauthorized use.

According to the TSSB, “The Coins Miner investments are securities under Texas law, but the offerings are not registered for sale in Texas and neither Coins Miner nor Lara are registered to sell securities.”

The second company sanctioned by the TSSB in this round is a Belize-based project called DigitalBank.

The project’s Director, Ranca Romic, told Coindesk in an email, “We don’t sell anything. No ICO. We are a software developer company. We planned maybe a future ICO in late 2019. But for the moment we are just developing the software.”

But a page on the DigitalBank website, “Innovative Financing Solutions,” states the following:

“FinanceCoin is currently actively used globally in major parts of the world and international markets by numerous Venture Capital Firms that have invested and are planning to invest in technology start-ups and emerging growth companies. FinanceCoin is… the one and only (digital currency) targeted at the exponential high-growth potential technology sector.”

The TSSB alleges that the company claimed, “investors who purchase the token now can earn a return of 1,900% once it is sold in an initial coin offering next year.”

Digital Bank is alleged to have been promoting itself through, “liberal use of a 33-second video of Barack Obama,” in which the former US president discusses technological and encryption advances in general.

The video is accompanied by this text from DigitalBank: “Try to understand what Obama in 2016 already understood about the company.”

DigitalBank has also allegedly been using a bounty program to promote itself.

In a bounty program, participants are incentivized to promote the project, mainly through social media, in exchange for digital tokens.

But the TSSB says that participating in an ICO bounty program in Texas amounts to the promotion of securities:

“…(T)he company is not disclosing that participating in… a (bounty) program requires a person to be registered to sell securities.”

The third project sanctioned by Texas at this time is Ultimate Assets LLC, a, “phantom entity…not located at the address listed on its investment contract,” with no business filings on record in Massachusetts.

The TSSB says Ultimate Assets LLC has been soliciting Texans for a crypto and foreign exchange trading program, claiming, “an initial investment of $1,000 will turn into $10,000 in three weeks.”


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