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January 6, 2018

BitConnect handed a cease order from Texas State Securities Board (TSSB) on January 5, stating to close down operations in 30 days.

TSSB orders Bitconnect stop operation

The cease and desist letter orders BitConnect to stop selling its Bitconnect Coin assets in Texas until when it registers with Securities Commissioner or given exemptions to register. It accuses BitConnect of using “sales agents” or “affiliates” to lead Texas residents to invest in BCC.

The firm is a cryptocurrency investment lending platform, registered in London but the commission stated that BitConnect fails to disclose assets and liabilities, business physical address, investment risks and identity of its principals.

“It rerepsents investors may earn up to 40 [percent] interest per month over a specified term and an additional rate of interest calculated on a daily basis,” the notice reads. The Board then goes on to call out the investment platform for its deceptive promise as a “safe way to earn a high rate of return on… investment[s].”

The report also states BitConnect of promoting BitconnectX ICO slated for next week on January 10. Moreover BitConnect has a right to request a hearing for 30 days after serving with the order. Otherwise, the order will become final and non-appealable. Failure to comply is, according to the letter, a criminal offense punishable by $5,000 or more of fines or imprisonment of no more than two years or both at the same time.

Bitconnect’s failure to submit document

It is not the first time BitConnect is receiving such orders. In November 2017, UK Registrar of Companies threatened to close down the company, confiscate its assets, and dissolve its operations if it failed to submit necessary documents. BitConnect appears to have multiple registrations with the UK Registrar.

Ethereum co-founder Vitalik Buterin and Litecoin founder Charlie Lee says the entity is a Ponzi scheme and urged investors not to invest in it. 

“Their official videos are effectively promising 1% daily returns and touting this as the primary benefit of the project. Ethereum and bitcoin, on the other hand, are backed by a proven and consistent record of 200-700k daily txs and $100k-4m daily txfees,”

Buterin tweeted last month.