The statement, “Don’t mess with Texas,” still rings true today. BitConnect, a cryptocurrency, that many believe to be a Ponzi scheme, was sent a cease and desist letter in Texas recently.

The intent of the Emergency Cease and Desist Order that the state of Texas filed recently, is to, prevent the company from further engaging in activities related to their investment schemes.

The Securities Exchange Commission seems to have been watching BitConnect along with their partners at the Texas State Securities Board and have sent the operators of BitConnect note, telling them to stop their fraudulent activities.

The Fort Worth branch of the Securities Exchange Commission stated via twitter:

1/2 Our counterparts at the Texas State Securities Board have ordered BitConnect, a $4B cryptocurrency promoter, to halt its fraudulent sales.

Comments in regards to the tweet agreed with the statement, with some saying:

Cryptocurrency promoter” is too kind. they are running a ponzi with a fake product.

BitConnect might not have heard about the fact that Texas and its inhabitants, Texans, are not entities that one should mess with, and are finding out in quick order why the saying is so and rings true to this day.

The Texas Securities Board quickly shut or has stated the company needs to shut down its operations in Texas as soon as they were able to understand the operation and its intents.

These Texan regulators don’t seem to take too kindly with the various promises offered by representatives of the BitConnect company. It looks like they sense BitConnect representatives might be snake oil salesmen.

BitConnect and Its Promises

BitConnect promises that those who invest with them will be able to realize yearly gains or returns of perfect one hundred percent. Their loans or program for lending, states that it can offer investors a very lucrative return of forty percent. This stated return seems to make it to where their loans will carry high-interest rates, akin to that of payday and other shark loans.

The company seems to aggressively expand by bringing on board affiliates, similar to the model of Amway and other multi-level networking firms. The big problem is that these “investments” could count as securities, and the lack of registration by both the sellers and the company of these “investments” cause a problem for the state of Texas.

The company may meet the pure definition of what it means to be a Ponzi Scheme.

A Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.”

Other Reports and Incidents

Many have sounded the alarm about the company, yet the price of the token of the company fluctuates around four hundred dollars.

This is not the first time that the company has been banned or told to stop operations due to suspicions of their lack of integrity in operations.

 Bitguru reported earlier that:

Bitconnect might be in danger of being forced to close down due to increasing concerns of the project being a fraudulent company who is engaging in a Ponzi scheme.

Reasons that people may be buying into BitConnect

The first reason may be that the company is slightly using the brand of Bitcoin with a little variation (BitConnect) with the symbol BCC, thus, possibly confusing new investors and attracting them.

The second reason may be in regards to lack of growth in bank accounts.

It’s no surprise that in an era when banks in the United States are offering a yearly return on checking or savings accounts at 1% per year,  and BitConnect states that people can earn one percent per day, that investors flock to opening an account with them.