State of Texas Issues Cease and Desist Order Against Bitconnect Calling it a Ponzi Scheme
Texas Securities Commissioner has ordered BitConnect to halt selling cryptocurrencies on January 4, 2018.
An emergency cease and desist order has been issued by the official Texas State Securities Board.
Part of the order reads:
“The Securities Commissioner found that the BitConnect investments are securities, but were not registered as required by the Texas Securities Act and State Securities Board Rules and Regulations. In addition, the company is not registered to sell securities in Texas.”
BitConnect is described as an open-source, crypto community platform designed to offer multiple investment opportunities. Interesting information highlighted in the said Cease and Desist order is that Bitconnect is an England-based company, and Texas ruling does not have a direct impact on its operation.
However, Texas Securities Commission has an authority to ban the said platform from doing transactions with Texas residents. In the said Cease and Desist Order, the Texas regulator expressed harsh words against Bitconnect, stating:
“BitConnect has disclosed virtually nothing about its principals, financial condition, or strategies for earning profits for investors. It has not provided a physical address in England.
Despite providing no information on how it will make money for investors – including the algorithms behind the Trading Bot – BitConnect is touting its investments as a “safe way to earn a high rate of return.”
While many countries are more focused on creating regulation as a national concern, this measure taken by Texas shows that there is also a need to check the regulatory landscape of cryptocurrency-related transactions at a local level.