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Author Topic: [2018-04-12] Texas State Securities Board Investigates Crypto Investment Fraud  (Read 22 times)
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April 12, 2018, 06:09:27 AM

The Texas State Securities Board (TSSB) has released a report detailing some of the risks, including fraud, involved in investing in cryptocurrencies in the state.

Investing can be a risky business. The are countless tales of victims losing thousands and even millions in Ponzi schemes and dodgy dealings. Even the biggest financial institutions can be guilty of shady and illegal behavior.

The virtual currency sector is no different and for some investors, the cryptocurrency market is unchartered territory. There is also a high risk of fraud if proper research isn’t conducted. According to Forbes, this is an issue that the Texas State Securities Board (TSSB) is warning potential investors about.


The board conducted an investigation involving 32 cryptocurrency investment promoters over a duration of four weeks. One of the findings in the report was that almost two-thirds of these promoters did not give investors a physical address. Another conclusion was that five out of the 32 promoters did not disclose any investment risks, as well as the risk of cybersecurity threats and hacks, and instead simply promised gains of up to 40% every month.

In the case of the former, the regulatory board has warned investors that a lack of a physical address will seriously hamper any legal proceedings in the event of fraud. This is because lawmakers will be unable to physically serve notices or any type of legal correspondence.


As with anything online, the board also warned against taking anything at face value as it’s easy to manipulate information on the web.

The report went on to explain:

Charming portraits and lengthy profiles may convey a sense of comfort and security, but virtually anyone from anywhere may be lurking behind the flashy graphics.

The board cited an example of this in the form of LeadInvest, a crypto investment site. In the personal descriptions for their management team, the Panama-based platform was found to be using stock photographs or pictures of people who are in no way affiliated with LeadInvest. The TSSB subsequently issued a cease and desist order.

Another, but unrelated, example of this is that of another platform who had their ICO earlier this year. In a similar situation, they used a photograph of US actor, Ryan Gosling, in the description of one of their team members.


In the case of the TSSB report, none of the promoters were registered to sell securities in the state. In addition, these promoters hoped to lure investors by harping on about Bitcoin’s meteoric price rise last year, but were not even offering any Bitcoin-related investment options.

According to the board, unauthorized trading could result in administrative, civil, or criminal repercussions.

Even though the rules may be different when it comes to investing in crypto compared to traditional assets, there is one similarity. Potential investors need to make sure that they have thoroughly researched what they’ll be putting their money before taking out their leather, or digital, wallets.
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