A cryptocurrency firm in Dallas, Texas has received a cease-and-desist letter from state regulators telling it to stop making false promises to its customers. The company, known as Forex and Bitcoin Trader, was advertising on Craigslist that those who invested their funds in the company early would receive 900 percent gains within a matter of weeks.
Texas Seems to Be the Chosen Hunting Ground for Crypto Criminals
Obviously, this sounds too good to be true… Virtually impossible. 900 percent that quickly? Unless the investment is in some sort of newly discovered mineral ore that’s vital to the existence of human life, this number seems a little farfetched… Just way too big.
Texas officials took issue with these claims and immediately jumped into action, telling the company to end its phony bologna promises or face the consequences. The company claimed it could produce such returns through an insurance policy it had purchased designed to back client crypto funds, along with a “balance sheet” that could guarantee net returns within a specified timeframe.
However, the company failed to produce any information regarding the policy or its capital. It also did not put out any notices warning customers regarding the risks commonly associated with crypto investing (i.e. price volatility, etc.)
The move comes just days after two other cryptocurrency-based investment firms, stationed in New Jersey, were issued cease-and-desist orders by lawmakers who claimed the companies were spewing similar (and blatantly false) stories to their customers. The firms – known as Uno Call and Zoptax LLC – were allegedly hosting fake initial coin offerings (ICOs) and selling unregistered securities.
Attorney General Gurbir S. Grewal issued a statement on the matter, explaining:
Today’s action demonstrates that our Bureau of Securities stands ready to enforce our investor protection laws in cases involving initial coin offerings and cryptocurrency-related investment schemes. As innovation in the online cryptocurrency-related investment market continues, market players need to understand that the rules still apply to them.
Texas has become something of a haven for cryptocurrency scams over the past year. The state recently shut down two separate operations – Coins Miner and Digital Bank – on several accusations including selling false securities, posting fake endorsements from several well-known cryptocurrency exchanges and trading platforms, and holding phony giveaways.
In addition, the state is warning investors that this is not the last time they’ll hear of such scams. Recently, Joe Rotunda – the director of enforcement at the Texas State Securities Board – said that malicious actors are looking for new technology to exploit, and crypto presents the perfect opportunity.
This Could Happen Again
It’s unfortunate and inevitable. Bad actors tend to follow the news and the things that get widespread public attention… Absolutely, there will be more. It’s tough because there are a lot of legitimate firms out there dealing with this new technology.