In its 2018 Enforcement Report, the Texas regulator, which provides investigative, financial, and prosecutorial assistance to state and federal prosecutors, said that the orders cited a total of 60 individuals and entities that were not registered to sell securities in the state. These individuals and entities reportedly used online advertisements, social media, and other solicitations to attract local investors.
Suspected scam companies included BitConnect, an offshore multilevel marketing company that raised capital for a cryptocurrency trading program. According to the regulator, the emergency action effectively shut down the scam, as BitConnect almost immediately lost 99 percent of its market capitalization of $2.6 billion.
“Promoters of cryptocurrency-related offerings are taking advantage of the anonymity of the internet to attract victims, weaponizing social media to connect with investors in Texas,” the regulator said.
The TSSB is one of the most active state regulators when it comes to issuing administrative orders against companies offering fraudulent crypto-related investment products. In May 2018, the Texas regulator joined more than 40 US state and Canadian regulators in a coordinated investigation of crypto investment scams. At the time, the initiative, called Operation Cryptosweep, have opened approximately 70 investigations and taken or have pending 35 enforcement actions.