Texas State Securities Board Uncovers Three New Crypto and ICO Scams

The Texas State Securities Board issued three emergency cease and desist orders Tuesday, Sept. 18, to shut down a Russian cryptocurrency scam, charge DigitalBank and two principals for threatening immediate and irreparable harm to the public, and charge a forex and Bitcoin trader of guaranteeing false ROIs, respectively.

According to the first cease and desist order, Coins Miner Investments Ltd. was purportedly parodying emails and manipulating online media to create the impression that it is a legitimate cryptocurrency mining firm in the U.K. However, the Securities Board's action alleges that Coins Miner is running a complex, online fraud out of Volgograd Oblast, Russia.

The Texas State Securities Board's second cease and desist letter was directed toward DigitalBank, formerly known as DGBK, for claiming to be building an external wallet, known as the Photon Encrypted Ledger Key, and raising capital for an illegal initial coin offering.

In addition to the Photon Encrypted Ledger Key-which reportedly would allow users to buy and sell fiat and cryptocurrencies on an anonymous, unhackable peer-to-peer basis-DigitalBank was found to be offering shares issued by the company as well as DBGK, a utility coin set for an ICO next year.

According to the Securities Board, the company told prospective investors to purchase DGBK at a price of $0.50 and to sell it for $10.00 during the ICO. Per these terms, a $5,000 investment would increase to $100,000 in the ICO period.

The Securities Board concluded the offering deceptive and fraudulent, as the company was misleading investors about the profitability and hiding key information-including the identity of people associated with the company, the identity of a financial institution supposedly backing the company, the costs of producing and distributing the Ledger Key and the risks associated with the investment.

The videos, according to the Securities Board, are misleading as they were created at the 2016 SXSW festival, several years before DigitalBank's inception.

Finally, the Texas State Securities Board issued a third cease and desist letter to Ultimate Assets, which falsely guaranteed investments with a 900 percent ROI in Bitcoin and Forex trading.

Per the Securities Board, Ultimate Assets told potential investors that they would be able to provide exorbitant returns.

An initial investment of $500 would see a $5,000 return, a $1,000 investment would see a $10,000 return and so on.