The Texas securities regulator has issued an emergency action to stop a digital currency company from operating in the state.
The Texas State Securities Board ordered the Spain and Estonia-domiciled Mind Capital to cease and desist from targeting Texans immediately. Securities Commissioner Travis Iles said the company has been illegally promoting a digital currency investment pyramid scheme.
Mind Capital reportedly sells its native digital token, MCcoin, to investors. According to the Texas watchdog, the “utility token” is advertised to be constantly valued at $1, and investors can participate in the company’s digital currency-fiat arbitrage program. The company claims to use ‘advanced algorithms’ to analyze the digital currency market, identifying the right time to buy or sell digital currencies at a profit, authorities said.
Mind Capital, allegedly led by Spanish record producer Gonzalo García-Pelayo, constantly touts the success of its algorithms, the regulator said. On its marketing materials, it claims to make 0.5% to 1.5% in daily profits.
The company further operates a multi-level marketing scheme, according to the Texas State Security Board. Mind Capital reportedly brings on agents who are charged with the recruiting of new members at a commission. The agents receive 8% of the profits earned by recruited investors and between 2-8% of the other recruits at subsequent levels, the regulator said.
The securities regulator said that Mind Capital has been concealing key information, such as the risks associated with security offering and its leadership. The company isn’t also licensed to offer such products to Texans.
“Although promoters may boast about the successes of these platforms, potential investors are rarely afforded the opportunity to verify their claims – or even determine whether the applications actually exist,” Iles said.
The order comes just days after a similar warning against Mirror Trading International. The South African company also claims to use sophisticated algorithms to generate profits for its investors, saying it makes almost 1,000 trades daily without a loss in any of its purported trades.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.