The Texas Securities Commissioner signed a decree committing Bitconnect to stop operations, as the company is accused of fraud. Bitconnect is a foreign company that claims a share of $ 4.1 billion in the market of cryptocurrency.The regulator’s decision was to cease the numerous investment programs managed by Bitconnect.
The regulator believes that Bitconnect breaks the rules without disclosing information about its physical location, assets, and liabilities. Moreover, it misleads users, claiming that its Bitconnect Lending Program is a safe way to make money without significant risk. However, the company is well aware of the risks associated with cryptocurrencies.
What Laws the Company Violated
The final part of the decree stresses that investments in the Bitconnect Staking Program and Bitconnect Lending Program are securities. Therefore, the company violates the Texas Securities Act. Because Bitconnect does not register their tokens at the Securities Commission.
In November 2017 there was a discussion of Bitconnect in the crypto community where Vitalik Buterin accused the company of the Ponzi scheme. Bitconnect is based in England, and this decree does not directly affect the business. Nevertheless, the regulator has the right to prohibit Bitconnect from interacting with the inhabitants of Texas. This will create certain problems for it since it will not be so easy to separate the inhabitants of Texas from other users of the site.
According to Coinmarketcap data, at the moment, Bitconnect’s cryptocurrency is on the 21st place in the rating of digital currencies. Its capitalization is equal to $ 2.54 billion.