The Texas State Securities Board (SSB) had issued 16 different orders against crypto-related businesses which were suspected of being involved in illicit activities and/or scams.
According to the SSB’s enforcement report (released on February 7th), there were 60 individuals and/or entities that may have targeted residents of the US state of Texas. The report noted that the residents were presented various investment options which were mostly unregistered securities.
As mentioned in the enforcement report:
Promoters of cryptocurrency-related offerings are taking advantage of the anonymity of the internet to attract victims, weaponizing social media to connect with investors in Texas
State Securities Board Launched 32 Investigations In December 2017
As confirmed in the regulator’s report, the SSB issued 16 separate administrative orders (in 2018) “against promoters of suspect cryptocurrency investments.” The bad actors allegedly “used online advertisements, social media, and other solicitations” to lure Texas residents into investing in questionable digital asset investment schemes, SSB's report stated.
In order to track down individuals and companies that are involved in crypto-related scams, the SSB has been working closely with law enforcement agencies in Texas. In April 2018, the SSB’s enforcement division had published the findings of its four-week long investigation into various cryptocurrency projects that were suspected of violating securities laws.
The report, titled “Widespread Fraud Found in Cryptocurrency Offerings”, noted that Texas’ securities regulator had launched 32 different investigations in December 2017. Authorities in Texas had found many companies offering securities which had not been registered with the state’s financial regulators. Because registration is mandatory under Texas’ state laws, the firms or businesses were operating illegally or “outside the law”, the report stated.
Texas Regulators Go After Mining Company
After conducting the investigations, the SSB concluded in its report (last year in April):
The revolution in digital money is creating an environment ripe with illegal and fraudulent securities offerings … The potential to cash in on what could be a global [movement] in web-based transactions has put investor enthusiasm into overdrive.
In addition to cracking down on fraudulent and illegal crypto-related investment businesses, regulators in Texas issued a cease and desist order to an Australian cloud mining company known as AWS Mining PTY LTD. The mining firm was also charged with attempting to sell unregistered securities.
An official notice sent to AWS Mining had alleged that Josiah Kosek, the chief marketing officer at the firm, and several agents working under him, had violated the Texas State Securities Act. The accused were charged with luring Texas residents into purchasing the company’s unregistered cloud mining contracts.