Texas regulators have, for some time now, viewed cryptocurrency investment schemes as a risk to Main Street investors and have continued to issue public warnings against possible crypto-related scams during the COVID-19 pandemic.
The latest move from the Texas State Securities Board, or TSSB, is action, not words: an emergency cease and desist order against an entity misappropriating the Binance name.
According to an announcement on Monday, the target of the order is a business claiming to operate from the United Kingdom, which has previously been subject to an advisory warning from securities regulators in the Philippines. They had already warned that Delta Crypt was “illegally offering securities paying ‘ridiculous’ returns,” cautioning the public to stay away.
Since then, the business has apparently ditched its former name "Delta Crypt" and launched an online investment scheme — while not being registered to sell securities in Texas — using various misleading brands such as Binance Assets, BinanceAssets Ltd and Bit Kind Ltd. The TSSB summarized the schemes:
“The pitch is relatively simple — invest a little, gain a lot, and don’t worry about risk. In fact, the ‘Gold Plan’ pays a guaranteed 30% return, and the ‘Diamond Plan’ pays a guaranteed 40% return.”
The TSSB has found that these offerings are “fraudulent and deceptive” and that Delta Crypt has concealed crucial information from its principals, including the prior intervention from Philippine government agencies. It has also failed to warn investors against the risks associated with cryptocurrency investments and has illegally solicited its sale agents. This latter point implies the business pledged to pay commissions without regard for registration requirements or licensure.
The TSSB is relatively active against perpetrators of fraud in the crypto space, recently issuing orders against two alleged scams in September 2020, which carried penalties of $10,000 or two to 10 years in jail, or both.