Texas Regulators Cracks Down on Fraudulent Crypto Trading Platform

Financial regulators in Texas have been on a crackdown blitz recently, taking action against crypto companies that they believe to be dangerous. This week, the Texas State Securities Board (TSSB) took another step towards expelling one of these perceived scams.

Arbitrage Trading and an MLM Scheme

According to an official press release, the TSSB explained that it had ordered Mind Capital Tech SL to stop offering securities to citizens. The company, which is currently based out of Estonia and Spain, had allegedly created a fake crypto investment scheme and defrauded several Texans already.

The TSSB explained in its press release that Mind Capital had lured investors to purchase MCcoin, a fake internal utility token that the company had valued at $1 per unit. By buying the asset, investors would be able to use the company’s crypto-fiat arbitrage trading platform.

Mind Capital had boasted about its arbitrage trading platform, reportedly claiming that it could earn investors anywhere between 50 percent and 150 percent returns every day. As the press release showed, the company also implemented a “ten-level pyramid scheme” to encourage workers and investors to sell the investments. The TSSB particularly names Craig Kintzel, a resident of Georgetown, Washington D.C., as one of the company’s primary sales agents in Texas.

Kintzel and several other agents reportedly got eight percent of the profits that their recruited investors get on their commissions. They got another two to eight percent from the other investors at several levels of the pyramid.

Several other high-ranking company officials got named in the suit as well. These include President and chief executive Gonzalo Garcia-Pelayo, Vice President Oscar Garcia-Pelayo, and Network Construction Consultant Rubén Arcas. The company’s Social Media Director, Expansion Manager, and Creative Director also got roped in.

Texas Regulators Expedite Crackdown on Fraudulent Entities

The order punctuates what has been a rapid effort from the Texas securities regulator to clean up its crypto space. Texas already got a significant amount of praise for being the leading frontier for the United States’ growing mining industry. While this doesn’t necessarily mean that statewide crypto adoption is imminent, a healthy, crime-free regulatory environment could be a significant draw in the future.

The case also marks the second crackdown by the TSSB in as many weeks. On July 9, Securities Commissioner Travis J. Iles said in a statement that the agency had closed down Mirror Trading International PTY LTD, a South American multi-level marketing scheme that offered crypto investment opportunities in the state.

Per the statement, Mirror Trading had recruited several unregistered salespeople to lure investors into giving them money. The company had promised these people 10 percent returns every month, with salespeople getting a mandate to onboard new investors and multi-level marketers into the scheme.

Apart from the fraudulent marketing tactic, however, the TSSB also alleged that Mirror Trading and its founder, Cornelius Johannes “Johan” Steynberg, had misrepresented and hid vital information. This information included his background as a Forex broker, his handling of the company’s assets, and the artificial intelligence system that the company used to make trades.

Amongst other things, Mirror Trading claimed to have enrolled over 76,000 investors from about 170 countries. While the amount that the company had accumulated wasn’t revealed, it won’t be operating in Texas anymore.