Texas securities regulator issues Cease & Desist Order against cryptocurrency firm LeadInvest

Maria Nikolova

LeadInvest is ordered to cease and desist from offering for sale any security in Texas and from acting as a securities dealer in Texas.

Texan authorities keep up their fight against cryptocurrency-related scams. After the the Texas Securities Commissioner issued a cease & desist order against DavorCoin, another entity promising an easy entry into the world of Bitcoin is hit with such an order. On February 26, 2018, the Securities Commissioner of the State of Texas issued an emergency cease and desist order against LeadInvest, an entity that purports to be “a technology company that specializes in the development of trading software in the Forex market and the Bitcoin currency”.

The Texan regulators have found that LeadInvest is publishing online advertisements targeting investors located in Texas. The entity offers an investment program, a cryptocurrency mining program and a fiat currency lending program. The website, operated by the firm, claims that LeadInvest “enables smaller investors to finally get involved in the Forex and Bitcoin markets and have real success”.

The Order explains that the LeadInvest programs are not registered and regulated in Texas. The entity is not registered with the Securities Commissioner as a dealer or agent. Moreover, LeadInvest is recruiting individuals who are not registered with the Securities Commissioner to act as its agents. In addition, LeadInvest is not disclosing the identity and qualifications of its principals, nor its physical address. There is no financial information about LeadInvest’s business. This is a failure to disclose material facts, according to the Order.

The regulators note that LeadInvest has also failed to disclose the risks associated with the activities related to cryptocurrencies.

The Order is issued in response to findings that LeadInvest is offering unregistered securities and is not registered as a dealer in Texas. These are violations of the Securities Act. The respondent is also accused of fraud and of making materially misleading statements to the public.

LeadInvest is ordered to cease and desist from offering for sale any security in Texas and from acting as a securities dealer in Texas. The Order also prohibits the respondent from engaging in any fraud in connection with securities offering.

LeadInvest is allowed to request a hearing before the 31st day after it was served with the Order.

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