Texas regulators take swing at another cryptocurrency company


Texas securities regulators are finding that their efforts to clamp down on shadowy cryptocurrency companies has something in common with the arcade game whack-a-mole.

Just weeks after issuing the country’s first state-level decrees against firms allegedly peddling fraudulent cryptocurrency-related investments, the Texas State Securities Board on Friday announced another emergency cease-and-desist order against a company that popped up in the aftermath.

DavorCoin was ordered to stop selling unregistered securities in Texas and to stop marketing them with statements that are “materially misleading or otherwise likely to deceive the public,” according to the securities board.

The state agency also said in its order that DavorCoin is concealing the location of its main place of business, the identities of its principal executives and its financial information, in part by claiming to investors that it can’t “officialize its domiciliation” because of tax and regulatory risks.

DavorCoin’s website doesn’t list an address or phone number to connect with the company.

The securites board served its cease-and-desist order to the company through Domains by Proxy, an Arizona company that offers Internet domain privacy services enabling domain owners to keep their information secret. Joe Rotunda, director of enforcement for the securities board, said “there are other ways we’re going to get (the order) to them” as well.

Rotunda said it appears DavorCoin began marketing itself in Texas to fill the gap left by BitConnect, which ended up closing its cryptocurrency lending program and its cryptocurrency exchange program after the state agency issued a cease-and-desist order against it early last month. The agency says investments in BitConnect’s cryptocurrency lending program actually were securities and therefore subject to regulation.

The investment being offered by DavorCoin are “very, very similar to BitConnect,” Rotunda said.

According to the securities board, DavorCoin announced after BitConnect closed its operations that DavorCoin is “now the new standard” and “many people are going to join us, the price will increase and all of you already in the game with us will benefit” from it.

Rotunda said his agency’s goal in issuing the cease-and-desist order “is to stop the fraudulent sale of this program in Texas.”

In addition to its action action BitConnect and DavorCoin, the Texas State Securities Board has issued similar cease-and-desist orders since late December against cryptocurrency-related companies USI-Tech and R2B Coin.



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