Texas Securities Board Shuts Down Two Crypto Scams

The state of Texas took decisive action today to shut down two cryptocurrency scams affecting residents of the great Lone Star State.

Texas sent emergency to cease and desist letters to two very different projects. While only one in the viewpoint of this analysis definitively qualifies as a scam, both companies marketed themselves in a highly misleading and deceptive manner.

The two projects in question specifically were Coins Miner, and Digitalbank respectively.

Digitalbank’s issues are somewhat more benign but still problematic. Essentially, they are being accused by Texas of selling unlicensed securities without a permit in Texas. In addition, they are accused of exaggerating the supposedly groundbreaking security of their “Photon Smart Key”(which claims to be a major step forward in security and offer peer to peer exchanges between other Photon Smart Keys using biometric data as an identifier), as well as ludicrously marketing their technology as endorsed by former President Barack Obama.

The allegations against Coins Miner are particularly egregious.

Specifically, they faked endorsements from a major crypto exchange and posted a video depicting fake facilities. They used a video recorded by a journalist out of context, and also allegedly ran a fraudulent car giveaway to those who put money into their platform.

Texas’s ability to stop this stems directly from the fact that Coins Miner allegedly spammed thousands of email accounts (including residents of Texas) in an attempt to get investments in their fake crypto mining scheme. They claimed that investors could expect to receive a minimum 240% return every twenty-four hours by investing with them.

They played up their fake affiliation with Coinbase as well, with one of the main operators of the scheme pretending to be “an official Coinbase trader”.

The scam takes on another twist if you factor in geopolitics. Basically, Coins Miner claimed to operate and be based in the United Kingdom, when in reality they were operating from Russia. Given the recent context of Russian cyber warfare in the US, it is questionable whether these were truly lone actors or were, in fact, operating on behalf of Vladimir Putin.

While this scam had just about as many red flags as humanly possible, it should serve as another warning to not get suckered into something that sounds too good to be true, because it probably is.

Although the readers of Hacked.com likely would not fall prey to such tactics, it’s sobering to think about the fact that operating these types of scams is still lucrative enough (and there are enough people who will fall for them) for bad actors to keep acting. Stay vigilant everyone.

Featured image courtesy of Shutterstock.