The state of Texas has filed an Emergency Cease and Desist Order against BitConnect, stopping their various investment programs.
A common saying often heard in the US is “don’t mess with Texas.” Well, it seems that BitConnect is finding this out the hard way. The England-based crypto company is the subject of an Emergency Cease and Desist Order from the Texas State Securities Board.
MESS WITH THE BULL, YOU GET THE HORNS
It appears that the Lone Star State is somewhat skeptical of the claims made by BitConnect. The company claims that investors can gain annualized returns of a stellar 100% or more, according to the order. One investment program, BitConnect Lending Program, offers to reward investors with a monthly return rate of 40%.
The company uses its own cryptocurrency, called BitConnect Coins (BCC), which users have to purchase with Bitcoin. There is currently a total supply of 9.4 million BCC coins, of which just over 6.1 million are circulating. Overall, BCC enjoys a total market capitalization of $2.6 billion, and there’s been a trade volume of $29.3 million over the last 24 hours.
HOGTIED, LONGHORN STYLE
It seems that the main beef that the Texas State Securities Board has with BitConnect is that the company’s investments are actually securities. However, the crypto company is not registered to sell securities in Texas, and their various programs have not been registered with state agencies that oversee securities.
Of course, there were some additional warning signs about the company, such as the lack of information on the company’s principals, its financial condition, or how it expects to generate such spectacular returns. Then there’s the bit that there’s no physical address for the company in England.
Part of the Emergency Cease and Desist Order reads:
"Respondent BitConnect is representing the BitConnect Staking Program and the BitConnect Lending Program are safe and lucrative investments, which is materially misleading or otherwise likely to deceive the public because Respondent BitConnect is not disclosing risks associated with investors purchasing and owning BitConnect Coins…"
The company actively recruits sales agents, which it calls affiliates, and offers them commissions for referring others to invest in the company. However, these “affiliates” are not registered to sell securities in Texas.
The company can appeal the Emergency Cease and Desist Order, but I probably wouldn’t bet the farm on it getting overturned any time soon.
What do you think about the BitConnect getting slapped down by Texas? Let us know in the comments below.
This article by Jeff Francis originally appeared on Bitcoinist.com 1/5/18
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