Texas' securities agency has issued another cryptocurrency-focused emergency cease-and-desist order, this time against a lending scheme called DavorCoin.
In its latest filing, signed Feb. 2, the Texas State Securities Board (TSSB) alleges DavorCoin has been issuing unregistered securities with fraudulent and misleading information to lure investors.
The filing arrives just days after the TSSB gave filed similar cease-and-desists over an overseas initial coin offering project called R2B Coin, as well as BitConnect, the cryptocurrency exchange and lending program that faced closure and a class action lawsuit after the TSSB's allegations.
In fact, TSSB alleges in the document that DavorCoin, operating in a similar manner to BitConnect, emerged and drew the regulator's attention after the latter ceased its business.
According to the agency, DavorCoin also launched a lending program that promised investors a significant return of investment, which falls under the agency's definition of unregistered securities.
Based on the document, potential investors would need to purchase the project's token, dubbed DavorCoin, using other cryptocurrencies to participate in the lending program.
"At approximately 5:30 p.m. CST on Jan. 26, 2018, it [DavorCoin] represented that an investor lending $30,000 in DavorCoin who elects a 'Locking period' of 120 days may earn $513 per day, $3591 per seven days, $15,390 per 30 days and $107,217 as of the 'capital release day' of August 23, 2018," the document stated.
The TSSB also alleged that the project is an investment fraud, because DavorCoin had intentionally hidden material information of its business - including its principles and business location, as well as how it plans to realize investment promises for investors.
The DavorCoin order yet again indicates the increasing level of focus Texas' securities agency is giving to cryptocurrency-related investment.
The agency said that while its mandate is not seeking to regulate cryptocurrencies, it will continue monitoring cryptocurrency projects that aim to bring returns to investors.
In a statement sent to CoinDesk, the TSSB's director of enforcement, Joseph Rotunda, commented:
"As cryptocurrencies continue to generate considerable attention in the media and interest from the public, these illegal and fraudulent securitized cryptocurrency offerings pose a grave threat to traditional investors. Absent a fair description of the terms of a product, the identity and qualifications of principals and the material risks associated with an offering, traditional investors may well be exposed to irreparable harm."
DavorCoin could not be reached for comment as of press time.
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