Emergency Order Cites Bitcoin, Forex Trader As Crypto Crackdown Continues

Aug 7

Texas Securities Commissioner Travis J. Iles on Aug. 6 entered the fourth emergency action against a cryptocurrency investment promoter since the State Securities Board started a second investigative sweep of suspect cryptocurrency offerings in late June. 

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. 

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.

The State Securities Board launched its second sweep in the wake of a spike in the price of cryptocurrencies earlier this year. In 2019, the price of one Bitcoin, the most valuable cryptocurrency by market value, quadrupled to above $13,000 in late June. One week later the price sank below $10,000, then jumped to $12,000 one week after that.

The number of suspect cryptocurrency offerings being promoted to Texas investors increase along with the run-up in the price of cryptocurrencies and volatility in the cryptocurrency markets.

For more information on cryptocurrency offerings, please see the State Securities Board Investor’s Guide to Cryptocurrency Offerings, a guide that includes: 

  • An explanation of how virtual currency differs from fiat currency like the U.S. dollar
  • How cryptocurrencies work in practice
  • Initial Coin Offerings and how cryptocurrency offerings are regulated
  • Specific risks in digital offerings
  • Common characteristics of cryptocurrency scams
  • All Texas enforcement actions
  • A glossary and video resources