After a statewide sweep in December 2017, Texas’ securities regulator will begin a second sweep of the entire state to find and shut down any illegitimate cryptocurrency schemes run by unlicensed companies and individuals, as reported by CrowdFund Insider, on July 4, 2019.
Regulators Have Reawoken
Those in the crypto and blockchain space are already aware that regulators in the U.S. have begun their crackdown on crypto investment funds and companies. This time, the Texas State Securities Board is back on the lookout for scams following media coverage of Bitcoin’s recent bullish run.
The Texas regulator also recently issued emergency cease and desist orders to three parties running an unlicensed business soliciting the public for money to invest in the cryptocurrency market. The parties allegedly convinced investors to give them money by guaranteeing lucrative profits.
A scam from India, TintXMining, told investors they can turn $5,100 into $213,000 in the span of three weeks. The fraudulent mining company falsely claimed they were licensed to operate and sell securities in the state of Texas.
Texas was a part of the multi-agency nationwide sweep for crypto businesses in late 2017 and 2018. Over 40 regulators with authority over a state or province took part in the sweep to uncover fraudulent businesses and protect the public from losing their wealth.
The next sweep by the Texas Securities Board has already begun and is expected to cover the whole state over the next four weeks.
Retail Investors Are Gullible
It’s easy to blame the scams and cryptocurrency industry as a whole, but bad actors exist in every market – including the government-beloved bond and stock markets.
The crux of the issue lies with the ease of persuading a retail investor that an opportunity is worthwhile.
When an individual first discovers the cryptocurrency market, every project seems like something that could change the world. More importantly, the ability to resort to rational thought and evaluate the feasibility of a project is not a natural instinct, but the result of experience and education.
The fundamental problem here is the lack of financial and technical awareness. This precarious mindset coupled with ease of persuasion is the single biggest factor that so many scams thrive.