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Texas fines a cryptocurrency investment firm

An investment firm that marketed cryptocurrency in Texas has been fined and ordered to provide restitution to its investors. Texas security regulators reported that Mintage Mining LLC has agreed to pay the penalties and restitution. This agreement came on the heels of an 18 month long investigation by Texas security regulators of what they characterized as increasing fraud in the new cryptocurrency industry.

The Texas State Securities Board had initially alleged that the company was committing fraudulent and misleading advertising in relation to the trading and the creation (“mining”) of cryptocurrencies such as Bitcoin. The Board also alleged that one of Mintage Mining’s affiliates was illegally offering its members commissions if they recruited more members.

Mintage Mining LLC, with its headquarters in Utah, is the first cryptocurrency investment firm to be ordered to pay fines and restitution in the state of Texas. The company was fined $25,000 and the restitution to investors was approximately $100,000, as estimated by the company. “We got this one stopped early,” said Joe Rotunda, director of enforcement at the Texas State Securities Board. “This thing would have continued to sell and could have spread like wildfire throughout Texas. It didn’t have that opportunity.”

A spokesperson for Mintage Mining LLC stated that the company was agreeing to the order of the Texas State Securities Board in order to clear its name and argued that the order did not mention fraud charges but merely a registration violation. The company spokesperson argued that the new “digital coins” were not financial products that actually needed to be registered in the state.

The Texas State Securities Board has reported that there has been a significant increase in potential cryptocurrency fraud in the state. The instances of alleged fraud in this burgeoning industry have arguably now surpassed the claims of fraud in the oil and gas industry, real estate industry and stock trading industries.

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