Texas Regulator Issues Cease and Desist Order to a Network of Crypto Companies

Texas Regulator Issues Cease and Desist Order to a Network of Crypto Companies

The Texas State Securities Board has taken an emergency action to stop a network of crypto-related companies from illegally offering investments in the state. A token offering and a mining firm are among those targeted by the securities board as selling fraudulent “cryptocurrency-related investments.”

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Emergency Action Taken

The Texas State Securities Board announced Thursday that an emergency action has been taken to “target promoters of crypto-mining investments.” According to the notice published on July 12 by the Board:

Texas Securities Commissioner Travis J. Iles took emergency action July 11 to stop a network of companies from fraudulently offering cryptocurrency-related investments to Texas residents.

Utah-based companies Mintage Mining LLC, Symatri LLC, NUI Social, Social Membership Network Holding LLC, and BC Holdings and Investments LLC are named in the emergency cease and desist order. They are all controlled by Darren Olayan of Lehi, Utah. In addition, NUI Social affiliates, Utah-based Douglas Whetsell and Houston-based Wyatt Mccullough, are also named in the order.

Investment Schemes

Mintage Mining LLC allegedly issues and offers two different crypto mining-related investments “illegally and fraudulently.” Together with Symatri LLC, they sell “pre-configured computer hardware to mine Kala,” an ERC-20 token which Symatri claims to be “fungible and transferable, and it is expected to be traded on cryptocurrency exchanges in the near future.”

Symatri also claims that more than 13,000 users have signed up for Kala’s ICO, which sold more than 814 million tokens. It supposedly raised over $8.5 million and more than 800 BTC. According to the Commissioner:

Symatri is not disclosing material information about the value of its cryptocurrency Kala. Nor is it providing information about the risks of investments in the computer hardware used to mine Kala.

NUI Social is a multi-level marketing company that claims to have more than 300,000 members in 140 countries. Members of the scheme recruit individuals for crypto investments and earn commissions for the people that they recruit.

Whetsell and Mccullough were named for publishing “advertisements targeting Texas residents,” the Commissioner explained. According to the document, the promoters made claims such as:

The average weekly rate of interest varies from three percent to seven percent and the annual rate of interest ranges from 180 percent to 250 percent.

The advertisements also represent that Mccullough’s investment grew 500% within 7 weeks while his uncle’s rose 4,000% in 10 weeks.

The Violations

The order “alleges widespread violations of the Texas Securities Act” by all of the entities and individuals named within. According to the Commissioner, “none of the persons offering any of the investments are registered to sell securities in Texas, nor are the investments themselves registered for sale or have qualified for an exemption from registration.”

The Commissioner elaborated:

The violations include making deceptive claims to the public. Olayan and Mintage Mining, for instance, are telling investors that Mintage is ‘in compliance’ with securities laws, ‘works to always stay ahead of cryptocurrency regulation,’ and ‘remain[s] so continually by keeping in contact with legal firms.’

All named parties have been ordered to immediately cease and desist from offering a security for sale in Texas until the security is registered or exempt. They must also cease acting as securities dealers or agents in the state until they are registered or exempt. They have likewise been told that they cannot engage in any security-related fraud in the state.

What do you think of the Texas State Securities Board’s cease and desist order? Let us know in the comments section below.

Images courtesy of Shutterstock and the Texas State Securities Board.

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The post Texas Regulator Issues Cease and Desist Order to a Network of Crypto Companies appeared first on BitcoinLinux.

Indian Central Bank Responds About Crypto Restrictions

Indian Central Bank Responds About Crypto Restrictions

India’s central bank has responded to a representation about its crypto banking ban. The Supreme Court gave the central bank seven days to reply following a hearing last week of the petition by the Internet & Mobile Association of India against the ban.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

RBI’s Response

India’s central bank, the Reserve Bank of India (RBI), has responded to a representation submitted by the Internet & Mobile Association of India (IAMAI), as directed by the country’s Supreme Court.

Nischal Shetty, the CEO of crypto exchange Wazirx, told news.Bitcoin.com that the representation is “a detailed document explaining blockchain, cryptos and how they function,” noting that it was “made with the belief that if the RBI gets a deep understanding of blockchain and crypto then they may go easy on the ban and think about regulations.”

This representation was sent to the central bank on July 3 during the IAMAI petition hearing. The Court ordered the central bank to reply within seven days. On July 11, RBI finally sent its response to the association.

According to Sohail Merchant, the CEO of Indian crypto exchange Pocketbits, RBI’s reply is a “2 page generic response.” While stating that “as of now the response cannot be made public” but there is “not much to read though,” he commented:

IAMAI received the response from RBI as directed by SC [Supreme Court], the response is generic with the same language as the public circulars. They have not even given deliberate thought to the points made by us, all the basis of their arguments is ‘Investor Protection.’

Shetty reiterated, “RBI has responded to IAMAI…They aren’t changing their stand.”

Until Next Hearing on July 20

The central bank issued a circular on April 6 banning all financial institutions under its control from providing services to companies dealing in cryptocurrencies, including crypto exchanges.

RBI gave banks three months to sever their relationships with crypto businesses. As the ban went into effect on July 5, banks began closing accounts of crypto exchanges. One by one, the exchanges stopped supporting fiat deposits and withdrawals.

To bypass banking restrictions, a number of exchanges are launching peer-to-peer (P2P) trading services. Koinex and Coindelta are reportedly launching their P2P services on July 15. Wazirx, on the other hand, already launched its P2P service. The company wrote, “Wazirx P2P goes live today, 10th July at 3PM. With Wazirx P2P, a buyer and seller can buy and sell cryptos for INR directly with each other.”

Meanwhile, industry participants and stakeholders are trying to get the RBI ban lifted by filing petitions with the Supreme Court, which will all be heard on July 20.

Do you think RBI will soon lift the banking ban on crypto? Let us know in the comments section below.

Images courtesy of Shutterstock, IAMAI, and the RBI.

Need to calculate your bitcoin holdings? Check our tools section.

The post Indian Central Bank Responds About Crypto Restrictions appeared first on Bitcoin News.


[UPDATED] Michigan Introduces Bills Adding Cryptocurrency And Distributed Ledgers To Criminal Statutes

On Tuesday, three bills were introduced in the Michigan legislature that provide legal definitions of cryptocurrency and distributed ledgers. Unlike earlier state laws that have attempted to address these new technologies, Michigan is considering amending its criminal code.

Crypto Tax Tips To Start 2018 Right

Even though cryptocurrencies are getting more and more exposure, their legislation seems to be a grey area for most governments, especially when it comes to declaring your income in digital currencies. The Internal Revenue Service, the US tax collection agency, has issued Notice 2014-21 stating that Bitcoin and altcoins are subjects to federal income and payroll taxes. So what to do with your crypto money and how to declare your taxes right?


Let’s start with the dreary subject of records. Yes, that applies to crypto investors too. You’d better have some if you are thinking about taxes. If you’ve ever tried to tell the IRS “I lost my receipt,” you don’t want to do it a second time.

The IRS has heard every excuse in the book. While it is not without sympathy, you’ll find it far easier not having to go to the additional effort of proving something by another means. Periodically, the IRS issues reminders to taxpayers regarding the importance of safeguarding your tax records.

That’s especially true in cases of natural disasters that make traditional record-keeping go haywire. But think of it year-round wherever you are. The IRS suggests creating a backup set of records stored away from the originals. It is good advice for crypto investors.

Selling some assets?

If you are sitting on some big gains, you might consider how your tax picture will look for the entire year. It isn’t too soon to start thinking this way. In fact, try to do it long before year-end so you can make adjustments. You might want to sell or hedge some, even if you think the market is still headed up.

There is a lot more than taxes involved in such decisions. But it can be wise to at least think about it. For example, what if your tax year already has a big capital loss in it, or you have a big carryover loss from prior years? In general, unused capital losses can be used to absorb up to $3,000 per year in ordinary income.

But unless you have capital gains to offset your capital losses that $3,000 would be the extent of your tax benefit. Some people sit for years and years with unused capital losses that carryover each year. So, if you also have unrealized capital gains, you might consider selling some gain assets, to be able to absorb your losses. Run some numbers and see how it looks.

And what exactly are you selling?

Another topic as tax time nears is to ask whether you really know what you are selling. That is, if you have 100 Bitcoins and you sell 10, which 10 did you sell? There is no perfect answer to this question. Most of the tax law considers shares of stock, not cryptocurrency.

However, many advisers think that the same kinds of rules should be applied in the case of multiple crypto assets that you hold. If so, specific identification of what you are selling, when you bought it, and for what purchase price, is likely to be the cleanest. But that may not be possible.

Some people use an averaging convention, where you essentially average your cost across a number of purchases. Consistency and record-keeping are important. You don’t want the IRS to claim that you denied the government its fair share of each sale. And remember, if you are claiming long-term capital gain treatment, being able to prove that you held the cryptocurrency for more than a year before selling is key.

Loans with interest and hedges

Loaning money shouldn’t be a taxable event to either the borrower or the lender, except for interest payments. So, can you loan out your cryptocurrency to people? You can, but the question is whether that loan will be treated the same as a loan of money by the IRS.

The jury is still out on that question. The IRS says cryptocurrency is property for tax purposes. You don’t want the loan and the repayment (of different cryptocurrency?) to be treated as taxable dispositions. Some of it may depend on your documents, and how much you make it look and feel like a real loan.

Hedges of cryptocurrency are another hot topic to consider. Hedges can help to avoid some of the volatility that has characterized the various crypto markets. But be careful that you are doing your best to avoid a disposition, meaning a sale for tax purposes, that you don’t want.


The holidays may be over, but probably everyone in your family would still like some Bitcoin or other crypto issues. The prices have been so ever-present in the news, that gifts and donations are still very much in the news. But is it smart tax-wise?

A charitable contribution would be the best type of transfer. If you give to a qualified charity, you should get an income tax deduction for the full fair market value of the crypto. If you bought for $500, and donate to a 501(c)(3) charity when it is worth $15,000, you should get a $15,000 charitable contribution deduction. What’s more, you won’t have to pay the capital gain tax on the $14,500 spread.

Giving to private parties is not as impressive. The same gift to your niece gets you no tax deduction. And it requires you to file a gift tax return since the gift is worth more than $15,000. For 2018, $15,000 is the amount of so-called “annual exclusion” gifts you can give to any number of people each year with no reporting required.

Any gifts over that $15,000 amount require a gift tax return, even though you probably won’t pay any gift tax. You normally would use up a small portion of your lifetime exclusion from gift and estate tax. For 2018, that number just went up dramatically. The amount you can transfer tax-free during your life or on death just went up to $11.2 mln per person. That is $22.4 mln per married couple.

Forms 1099

Finally, don’t forget about the coming onslaught of IRS Forms 1099. Normally, these not-so-fun little tax forms arrive around the end of January, reporting income paid to you in the previous calendar tax year. The IRS says that wages paid to employees using virtual currency are taxable, must be reported on a Form W-2, and are subject to federal income tax withholding and payroll taxes.

Similarly, payments using virtual currency made to independent contractors are taxable to them, and payers who are engaged in business must issue Form 1099. A payment made using virtual currency is subject to Form 1099 reporting just like any other payment made in property. That means if a person in business pays virtual currency worth $600 or more to an independent contractor for services, Form 1099 is required.

If you are a recipient of Form 1099, as most everyone is, keep track of them. Each one gets reported to the IRS and applicable state tax authorities. If you don’t report or otherwise address the reported income on your tax return, you can expect that the IRS will follow up.

This may seem confusing, but you shouldn’t worry. The IRS is usually much more lenient to those who fill in taxes, even with mistakes, rather than to those who avoid doing it at all.