Texas board takes emergency action over 'fraudulent' crypto mining investments
An employee wearing a protective face mask inspects mining rigs mining the Ethereum and Zilliqa cryptocurrencies at the Evobits crypto farm in Cluj-Napoca, Romania, on Wednesday, Jan. 22, 2021. The worlds second-most-valuable cryptocurrency, Ethereum
AUSTIN, Texas - The Texas State Securities Board has issued an emergency cease and desist order against several crypto entities for allegedly scamming potential investors.
The board says the entities, all founded by one man, were fraudulently promising profits for investing in a multi-level marketing-style mining operation.
Crypto scam order
The emergency order is against TEXITcoin, MineTXC, Blockchain Mint, and their founder Robert J. Gray, alleging they violated the Texas Securities Act with investments called "mining packages."
The order says potential investors were offered "seats on the rocket ship," being promised daily returns tied to mining operations. These were promoted through a multi-level marketing structure, the order says, in which participants received commissions and bonuses to recruit additional investors.
According to the order, the packages were sold in Texas without registration or securities dealer or agent registrations, in violation of state law.
The investors were not provided with information like company finances, mining operations, and the custody and safeguarding of investor funds, the order says, preventing them from properly assessing the investments.
Order requirements
As a result of the order, the respondents are now required to stop:
- Offering or selling unregistered securities in Texas;
- Acting as unregistered securities dealers or agents;
- Engaging in fraud in connection with the offer or sale of securities; and
- Making statements that are materially misleading or likely to deceive investors.
What they're saying:
"I am grateful to the staff in our Enforcement Division. In cases like this, when investor harm is immediate and ongoing, it’s imperative we act quickly. Their diligent, thorough and swift work will help prevent further investor harm," said Deputy Securities Commissioner Cristi Ramón Ochoa. "This also serves as a stark reminder to investors to be cautious of investment opportunities they may come across on social media channels. Especially ones promising passive returns tied to cryptocurrency mining, particularly when promotions rely heavily on recruitment incentives instead of legitimate investment performance."
What you can do:
The Texas State Securities Board encourages investors to verify registration status and carefully evaluate investment opportunities before investing. Registration information and investor education resources are available at www.ssb.texas.gov.
Investors with questions or concerns regarding this matter may contact the Enforcement Division of the Texas State Securities Board at enforceinfo@ssb.texas.gov or 512-305-8392.
The Source: Information in this article comes from the Texas State Securities Board.