Crypto Firm LeadInvest Receives Cease And Desist Order From Texas Regulator

Crime, News, Regulation | February 28, 2018 By:

The Enforcement Division of the Texas State Securities Board (TSSB) has issued an emergency cease and desist order to Panama-based crypto firm LeadInvest.

LeadInvest claims to be “a technology company that specializes in the development of trading software in the Forex market and the bitcoin currency.” The company’s website is loaded with alleged “get rich quick” language promising interested parties incredible returns, and that “zero” cryptocurrency experience is required to get involved.

According to the order, the TSSB found that the LeadInvest management team is non-existent. From blockchain advisors to smart contract designers, and from compliance attorneys to marketing staff, the executives are made-up. Photos of supposed team members were lifted from other websites and names were changed. The TSSB redacted some of the names of the actual people whose likenesses were misused.

Joseph Rotunda, TSSB’s director of enforcement, said they recognize that promoters of fraudulent investment schemes can capitalize on the anonymity afforded by the Internet to conceal their identity or, perhaps even worse, use the identity of others.

“Ultimately, violators may be luring investors through flashy blogs, online marketplaces, and social media to purchase nothing more than a promise made through a webpage maintained by an anonymous person from an unknown location,” said Rotunda. “Now more than ever, investors need to conduct thorough due diligence to verify the identity of promoters of online investment programs and determine whether they are telling the truth about themselves and their operations.”

The order also explains that the LeadInvest programs are not registered and regulated in Texas. The entity is not registered with the securities commissioner as a dealer or agent. Moreover, LeadInvest has allegedly been making deceptive and misleading statements when soliciting Texas residents – promising 20 to 100 percent returns on investments within one to three months through the firm’s cryptocurrency mining and trading services. The order alleges that, as of Feb. 26, LeadInvest has collected over $177 million from over 190,000 accounts.

This is the third cease and desist order that the state of Texas has sent out to a crypto-related company this month. The TSSB sent cease and desist orders to Hong Kong-based firm R2B Coin and DavorCoin for issuing unregistered securities to Texas residents with false and misleading information.