Emergency cease and desist order issued against DavorCoin in Texas
SEC is yet to act on fraudulent ICO lending Ponzi schemes but Texas won’t take it.
An emergency cease and desist order against DavorCoin is the third enforcement order Texas has taken against ICO lending Ponzi schemes. Davor Coin is a BitConnect ICO lending Ponzi clone.
It works by admins launching an ICO, receive money on the promise of a monthly ROI and eventually fold when withdrawals exceed new investment.
BitConnect’s recent collapse resulted in widespread investor losses. DavorCoin was heavily touted as a reload scam in the wake of BitConnect’s collapse and for victims who fell for the same scam twice, investment in DavorCoin has only resulted in bigger losses.
After climbing to about $160 shortly after launch, DAV has collapsed to around $5.
Texas’ cease and desist, issued on February 2nd, accuses DavorCoin of ‘illegally and fraudulently offering investments in a cryptocurrency lending program in Texas‘.
Citing their January 4th cease and desist against BitConnect, the Texas Securities Board acknowledges DavorCoin’s response.
On January 16, 2018, DavorCoin responded by announcing that “[t]his does not change anything for us” and that DavorCoin is now “the number one lending platform in the world!!”
DavorCoin also responded by announcing DavorCoin is “now the new standard… Many people are going to join us, the price will increase and all you already in the game with us will benefit from it”.
As with BitConnect , DavorCoin is accused of illegally offering unregistered securities within Texas.
The investments in the DavorCoin lending program have not been registered by qualification, notification or coordination, and no permit has been granted for their sale in Texas.
DavorCoin has not been registered with the Securities Commissioner as a dealer or agent at any time material hereto.
The Texas Securities Board went on to cite the following examples as evidence of DavorCoin’s ongoing fraudulent operations:
- intentional failure to disclose the identity of DavorCoin’s principals
- intentional failure to disclose DavorCoin’s principal place of business
- intentional failure to disclose DavorCoin’s assets, liabilities and other financial information about its business
- intentional failure to disclose the manner in which DavorCoin uses DAV tended by investors to generate a profit
The Securities Board has ordered DavorCoin to immediately cease and desist from
- offering for sale any security in Texas
- acting as a securities dealer in Texas
- engaging in any fraud in connection with the offer for sale of any security in Texas
- offering securities in Texas through an offer containing a statement that is materially misleading or otherwise likely to deceive the public
DavorCoin and its affiliates face two years in prison and fines of up to $5000 if they fail to comply.
The company has until March 5th to respond to the order, after which DavorCoin will be certified illegal in Texas.
None of the MLM companies recently served by the Texas Securities Board have responded to cease and desist orders issued against them.