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Texas’ War On Cryptocurrency – DavorCoin Banned

Davorcoin

Texas appears to be leading the U.S. in terms of crypto crackdowns after attacking its third cryptocurrency company this year. The latest emergency cease-and-desist order was slapped onto DavorCoin (DAV) yesterday after investigations into crypto investment programs.

The orders come from security commissioner Travis J. Iles at the Texas State Security Board (TSSB) and are handed to companies which the board deems fraudulent in nature, either through misleading claims, unclear operation methods or lack of sufficient registration. In yesterday’s case, the TSSB had issues with the fact that DavorCoin is ‘telling investors they can earn lucrative profits by investing in a lending program’, whereby they purchase davorcoin and then lend it back to the company. In this way, say the TSSB, DavorCoin claim that investors can earn over $100,000 USD in 120 days after an initial $30,000 investment.

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The problem is that DavorCoin does not say how these profits are generated, nor will it identify its place of business due to tax risks. In addition, it is an unregistered overseas firm. The company, which ‘aims to become the best alternative to current popular coins such as Bitcoin and Ethereum’, now has 31 days to challenge the TSSB’s order.

Two other companies have been hit by the board’s orders this year, including the UK’s well-known BitConnect lending platform. On Jan 4th, the TSSB released a statement which criticized the platform for similar transgressions as DavorCoin. That is, lack of disclosure about operations and location and failure to register as required. BitConnect was huge at the time, with its BitConnect Coins (BCC) holding a market value of $4.1B USD on Jan 3rd. Perhaps the Board was on to something, though. Due to a crash, BCC have a market cap of just $46M today.

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In addition, regulators slapped a cease-and-desist order on Hong Kong’s R2B Coin on Feb 2nd over ‘false and misleading information’. In the order, the board outlined that R2B is ‘intentionally failing’ to disclose financial information and the identity of its principals, and took particular issue with R2B’s claim that ‘We never go down in value.’

It’s not entirely unreasonable for Texas to be taking the stance that they are, especially considering the extremely high volatility of the cryptocurrency climate at present. Cryptocurrency scams are certainly not unheard of, and ensuring that Texas’ residents aren’t exposed to overseas unregistered investment companies is a good start in avoiding them. That being said, governmental interference is highly controversial in a market designed to avoid it.

Featured Image: HPPR.org

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