A major regulator in the US has told a firm offering returns of up to 900% over the internet to cease and desist its operations.
The Texas Securities Commissioner, Travis J. Iles, announced that he was ordering the firm Forex and Bitcoin Trader to stop its activities over suspicions about the offer being made to customers.
According to a statement posted on the website of the Texas State Securities Board yesterday (Wednesday), Iles is concerned that Forex and Bitcoin Trader, which is based in New York but which is offering services on a local listings board website in the Texan city of Dallas, could be fraudulent.
An Emergency Cease and Desist Order has been issued against the firm, meaning that it needs to stop its activities immediately.
The worry rests in part on a claim made by the firm that traders could feasibly receive a return of around 900% in just a fortnight.
Specifically, it says that an investor who places down $2,000 will receive $20,000 in return, with a tenth of the profits deducted for fees, as well as some extra for commissions.
However, this is a highly unlikely amount of money to earn from such an investment in such a short space of time.
Forex and Bitcoin Trader claims to offer a range of assets – including commodity-based derivatives, forex pairs and crypto coins.
There are also concerns that the company is purporting to be regulated, when it is in fact not.
“Forex and Bitcoin Trader is claiming to be a licensed broker that is authorized to trade in derivatives, securities, and foreign currency, but according to the order the company is not registered with the Securities Commissioner as a dealer or agent”, said the report from the State Securities Board.
“New York-based Forex and Bitcoin Trader is advertising on Craigslist Dallas, touting a 900% return in 14 days. The firm deals in cryptocurrency investments, commodity-based derivatives, and foreign currency trading.”
The State Security Board claimed that the company was telling traders that it had a range of insurance policies in place which could cover losses.
“According to the order, Forex and Bitcoin Trader is misleading investors by stating it has an insurance policy that backs client funds and a balance sheet with sufficient net capital to guarantee returns”, the State Securities Board explained.
“The company, however, is not disclosing any information about its capital or insurance policy, and it is failing to inform investors of the risks in trading cryptocurrency and foreign currency”, it added.
The order stipulates that the firm may not sell securities or act as a securities dealer. It also tells the firm not to engage in fraud, or to make deceptive statements.
The Texas State Securities Board is a name that those who watch the crypto trading world closely will probably have heard before.
It has taken an unusually proactive stance in the fight against crypto fraud. It was, for example, the first US state securities regulatory body to issue an order which targeted a crypto business.