Texas has been one of the more active states in the United States when it comes to cryptocurrency enforcement. The Texas State Securities Board was the first state securities regulator to enter an enforcement order against a cryptocurrency firm and, to date, the Securities Commissioner has entered 24 administrative orders involving 62 individuals and entities.
In June, the State Securities Board started an investigative sweep of suspect cryptocurrency offerings after the price of bitcoin nearly tripled over a period of three months. As part of that sweep, on August 6, 2019, the Texas Securities Commissioner entered a fourth emergency action against a cryptocurrency investment promoter.
According to the Emergency Cease and Desist Order, New York-based Forex and Bitcoin Trader is advertising on Craigslist Dallas, touting a 900% return in 14 days. The firm deals in cryptocurrency investments, commodity-based derivatives, and foreign currency trading. Forex and Bitcoin Trader is claiming to be a licensed broker that is authorized to trade in derivatives, securities, and foreign currency, but, according to the order, the company is not registered with the Securities Commissioner as a dealer or agent.
The company is soliciting Texas investors with the promise that a principal investment of $2,000 will return $20,000 after 14 days, minus commissions and fees equal to 10% of returns. According to the order, Forex and Bitcoin Trader is misleading investors by stating it has an insurance policy that backs client funds and a balance sheet with sufficient net capital to guarantee returns. The company, however, is not disclosing any information about its capital or insurance policy, and it is failing to inform investors of the risks in trading cryptocurrency and foreign currency.