According to a Texas State Security Board announcement dated August 7, a cease and desist order has been filed against a New York-based company who was promising improbable returns to investors through its unlicensed platform which dealt with forex and securities trading, as well as cryptocurrency investing. The board has also developed an official guide related to cryptocurrencies in order to educate potential investors on the definition, use, and risks of such new technologies.
Scam from New York City
Texas State Security Board has released a cease and desist order to a New York-based company called Forex and Bitcoin Trader that was tricking customers by promising stellar returns in just a few weeks’ time.
Forex and Bitcoin Trader has been found to promote its activities through Craigslist Dallas. The firm presented itself as a licensed broker that had to authorization to deal with commodity-based derivatives, securities, forex trading, and even cryptocurrency investments.
According to the order published by Texas Securities Commissioner Travis J. Iles, the alleged license wasn’t registered at all. Moreover, the order also describes the deceitful behavior the company was undertaking to persuade potential investors. Forex and Bitcoin Trader, in fact, claimed that an initial deposit of only $2000 could grow as much as $20,000 in just 2 weeks. Returns were supposed to be backed by insurance policies and net capital from the balance sheet.
However, the firm hasn’t shared any data on its financial stability or insurance cover. Moreover, the company has also failed to report to its own customers about the potential risks of trading cryptocurrencies or other securities.
The order marks the first time a state security regulator pushed an injunction against a crypto-related company. Texas State Security Board has warned the community about other shady cryptocurrency offerings that are rapidly becoming popular along with the last months’ price increase and volatility in the cryptocurrency market.
The Board has also developed an official Investor’s Guide to Cryptocurrency Offerings which should support investors into understanding what is a digital currency and how it behaves compared to the USD, including an explanation on initial coin offerings (ICOs), risks, scams and even a final glossary on the most popular terms used within the sector.
Taking Bitcoin Seriously
Considering this move, we can assume the government is starting to take Bitcoin and cryptocurrencies seriously. Interventions of this type increase confidence in the market and guarantee a certain level of protection for investors. Recently, there were also updates regarding escheatment policies.
On July 16, the state of New York was the latest to consider updating its escheatment policies, which stipulate the processes through which governments can obtain unclaimed property, in ways that would allow these states to seize cryptocurrency “abandoned” by its owners.