US Texas State Securities Board (TSSB) has issued an emergency “cease and desist” order against several Kala (KALA) cryptocurrency-related companies that had targeted Texans with misleading investment products like highly profitable mining rig or earning point in blockchain-based marketing platforms, TSSB said on Wednesday. All companies are linked to the owner of Kala cryptocurrency, Darren Olayan.
The four companies were not registered with TSSB although offering services to Texas residents. Mintage Mining, Symatri LLC, BC Holdings and Investments, Social Membership Network Holding and NUI Social LLC must immediately stop offering services in Texas.
“TSSB enforcement action aims to stop network of companies offering fraudulent investments in cryptocurrency-related investments, including a “mining rig” for new coin Kala,” TSSB explained.
One of the revealed illegal activities was a Mintage Mining advertisement that claimed an annual reward from 180% to 250% if buying a mining device from the company. Mintage Mining is led by Wyatt McCullough, who is controlled by Olayan, according to the regulator. McCullough has claimed being a highly successful investor that had made “up 5,000% on [his] investment in 7 weeks and his uncle is up 4,000% in 10 weeks”, TSSB order revealed.
In May, one of the other firms, Symatri, released a special new Kala mining rig for the planned “Kala hard fork”. According to the company, Kala would leave the ERC20 protocol with the aim to be built on the Bitcoin (BTC) blockchain and to make hard fork there. The first buyers of the rig would have “exclusive” accesses to mining Kala.
Kala coin is a cryptocurrency project that started in the autumn of 2017 and raised more than $8.5 million in an Initial Coin Offering (ICO).
The project white paper states:
“The Kala economy is simple: 1) Members earn points for completing simple activities through our revolutionary CORE platform, 2) they transfer those points to Kala, 3) they use Kala in the REACH marketplace, which offers a vast array of products and services, from highly discounted goods like those found at overstock sites, to gift cards, discount travel services, and more.”
This week, TSSB published its mid-year review, which revealed nine “cease and desist” orders against alleged crypto Ponzi schemes as at the end of June.
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