The Texas State Securities Board, the body responsible for regulating securities in the region, has issued an “Emergency Cease and Desist Order” to five crypto companies it alleges are illegally and fraudulently offering investments to Texas residents.
Alleging “widespread violations of the Texas Securities Act” the 19-page document issued on the 11th of June, outlines several areas each of the companies and directors involved have breached state law, with the Commissioner adding that:
None of the persons offering any of the investments are registered to sell securities in Texas, nor are the investments themselves registered for sale or have qualified for an exemption from registration.
The order identifies five companies it claims are in violation of the law: NUI Social, Social Membership Holding LLC, BC Holdings and Investments LLC, Symatri LLC and Utah-based Mintage Mining LLC.
The document alleges that the companies Symatri and Mintage Mining are “illegally and fraudulently” offering an ICO token – the ERC20 token, Kala, as well as an offering an investment opportunity to mine Kala.
Another company, NUI Social, the commissioner describes as a MLM – Multi Level Marketing company that purports to have over 300,000 members internationally and is also involved in offering opportunities for investors to mine the Kala token.
Furthermore, among other violations, the commissioner includes “making deceptive claims to the public,” – elaborating:
“Olayan [a director] and Mintage Mining, for instance, are telling investors that Mintage is ‘in compliance’ with securities laws, ‘works to always stay ahead of cryptocurrency regulation,’ and ‘remain[s] so continually by keeping in contact with legal firms.”
US Regulation
With the order demanding an immediate cease and desist, this latest legal action comes at a time when the US seems to be applying more scrutiny to the crypto industry.
On Wednesday this week, President Trump issued an executive order that will see the creation of a new task force to develop guidance for crypto fraud investigations.
Led by the Justice Department, the force will also include representatives from the SEC (Security and Exchange Commission), the Federal Trade Commission, and the Consumer Financial Protection Bureau, and will be tasked with preventing digital currency fraud, “cyber fraud” and protecting consumers as the industry grows.
