The latest enforcement report from the Texas State Securities Board states that the regulator issued cease and desist orders against 16 unlicensed crypto ventures soliciting investors in Texas in 2018.
The most noteworthy of those ventures is Bitconnect, a massive global crypto Ponzi scheme that accumulated a market capitalization of $2.6 billion before the emergency action brought by Texas effectively induced a massive divestment and caused BitConnect to, “….almost immediately (lose) 99% of its market capitalization.”
BitConnect was an offshore, multilevel marketing scam with its own cryptocurrency which investors could obtain by sending bitcoins.
The scam was promoted by, among others, several YouTube influencers with hundreds of thousands of followers, including Trevon James.
Texas warns the public that Internet-borne crypto investment scams are making it easier to maintain anonymity while duping investors:
“Promoters of cryptocurrency-related offerings are taking advantage of the anonymity of the internet to attract victims, weaponizing social media to connect with investors in Texas. In 2018, Commissioner Travis J. Iles entered 16 administrative orders against promoters of suspect cryptocurrency investments who were using online advertisements, social media, and other solicitations to attract Texas investors.”
According to the enforcement report, none of the 60 individuals and entities sanctioned by Texas in 2018 for offering illegal investment products, “…were registered to sell securities in Texas.”
The Texas State Securities Board (TSSB) also claims that an international crypto scam promoter from Australia:
“…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.”
Texas is offering cryptocurrency due diligence resources at the TSSB’s “regularly updated” Cryptocurrency Resources page, where information can be obtained regarding
- Administrative orders
- Investor Alerts
- Video, including FTC and CFTC webcasts on cryptocurrency fraud
- Special enforcement reports on trends in cryptocurrency offerings
- A cryptocurrency glossary