The Texas Securities Commissioner has issued an Emergency Cease and Desist Order against BitConnect – an England-based cryptocurrency startup that issues its own coins, BitConnect Coins.
At the time of writing, BitConnect Coin is the 25th most valuable cryptocurrency with a market share of over $2 billion.
A release dated January 04, 2018 from the Texas Securities Commissioner, states:
“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.”
The release further pointed out that BitConnect has not disclosed anything about its principals, financial condition, or strategies for earning profits for investors. The startup has not even provided a physical address in England, as well as no information about the algorithms behind its Trading Bot.
BitConnect deploys online advertising to recruit sales agents or “affiliates.” The Texas Securities Commissioner said that these sale agents are targeting residents of Texas and other states, through websites, social media, and online marketplaces like craigslist. However, the agents are not registered as agents of BitConnect to sell securities in Texas.
BitConnect is going to hold an Initial Coin Offering (ICO) in the U.S. on January 9, 2018, but has not disclosed how it plans to use the proceeds from the token sale, the release noted.
