Dezhou regulators ordered Bitconnect to stop selling "securities"

Nine customers funded financial reports in January 4th, the Dezhou securities Commissioner issued an emergency stop command, prohibit the sale of unlicensed securities. According to the press release of the Texas State Securities Commission:

The securities Commissioner found that BitConnect investment is a negotiable securities, but not registered in accordance with the provisions of the Dezhou securities law and the National Securities Commission. In addition, the company has not registered for the sale of securities in Dezhou.

BitConnect itself is an open source "encrypted community platform", which provides a variety of ways to invest and trade its native encryption currency, BCC. According to the order, Bitconnect provides the user with "the company claims to be able to achieve 100% or more annual returns of the project" investment.British company, Dezhou verdict

Since the version is clearly stated that Bitconnect is in the UK, the order does not directly affect the company. However, regulators do have the right to ban Bitconnect from dealing with Dezhou residents. Of course, it is challenging for the company to separate the Bitconnect users of Dezhou from the rest of the world.

While enthusiasts of encrypted currencies focus on national level regulation, Dezhou's ruling shows that local regulators can easily affect the regulatory framework. This adds to the unusual complexity of the regulatory compliance. If other jurisdictions follow the example of Dezhou, users and enterprises will probably find themselves dealing with numerous state and provincial regulators.

Draconian condemnation

Dezhou regulators severely condemned Bitconnect, and wrote:

"BitConnect has little knowledge of the person in charge, the financial situation, or the strategy for making a profit for the investor. It has not yet provided the address in the UK.

"Although there is no information on how to make money for investors, BitConnect is bragging that its investment is a 'safe way to get high returns'.

"However, investing in encrypted currencies will bring significant risks, as regulatory and legal actions, the competition of other encrypted currencies, and the extreme volatility of many encrypted currency prices."

The press release continues to explain in more detail:

"The company operates the web site and deploys online advertising to recruit sales agents, which the company calls" associated companies ". The company provides marketing materials to related companies, including online demonstrations, and pays them commission to get investment on the BitConnect project.

"BitConnect's sales agents are targeting Dezhou residents, and other state residents, through online markets such as web sites, social media and Craigslist.

"However, the sales agent did not register as the BitConnect agent for the sale of securities in Texas.

"Before the action of the US Securities and Exchange Commission, BitConnect recently announced that it would hold ICO in the United States in January 9th. The company uses the token distribution, also called the symbolic sale, to raise funds. "