Illegal cryptocurrency schemes discovered by Texans

The Texas Securities Board (TSSB) in its report called fraud with crypto-currencies “widespread.”

The regulator’s report was the result of a four-week investigation conducted “in response to a sharp increase in the investment opportunities offered to the people of the state in investing in crypto-currencies.”

As a result of the investigation into 32 enterprises that offered to invest in crypto-currencies, TSSB discovered a number of violations. Including:

  • None of these companies was registered with the State Securities Council;
  • Only 11 provided any physical address;
  • At least 5 of these companies guaranteed unrealistic income (misleading investors);
  • Six companies paid remuneration to investors who recruited other investors (which is from the distinctive feature of the financial pyramid).

The regulator’s report noted that in many investment schemes the terms “tokens” and “coins” are used interchangeably, although this is not the same thing. Under US law, tokens are considered securities, and companies that offer them must be registered.

As an example, TSSB recalled the British company BitConnect, whose activities the regulator banned by its resolution. Among the violations in the activities of BitConnect were the lack of registering tokens as securities, and hiding information about their physical residence, and misleading investors.

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The regulator also recalled that investing in tokens produced by start-ups carries serious risks.

“Without lighting, inherent risks related to crypto-currencies were left, such as:

Strengthening of national and international regulation;

High volatility in pricing;

The prospect of penetration of hackers into security systems;

The possibility of disruption of the investment program or the escape of the organizers with the funds raised.

In fact, at least five of the 32 promoters subjected to targeted investigations seem to have discarded risk concerns, ensuring the return on their investments,” the TSSB said.

Recall, previously reported that the head of the regulator of Hong Kong called most of the initial offer of coins (ICO) direct fraud.

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