Over the past few months, it has become clear that the US Government is quite liberal when it comes to cryptocurrency trade. Christopher Giancarlo’s testimony to the congress proved the fact that the government is not going to go strict on cryptocurrency traders. However, they made it clear that they are going to be very hard on those who are running scams and Ponzi schemes. The state of New Jersey has now issued an emergency cease and desist order to Bitstrade - a cryptocurrency investment platform.
The state of New Jersey has issued this emergency cease and desist order, which means that Bitstrade will have to, as of immediate effect, stop all operations in the state. For those who may not be aware, Bitstrade is a cryptocurrency-related investment company. The company takes payment in the form of Bitcoins and promises to pay investors 10% interest by using their money to invest in an ‘investment-pool’.
"From now on, you don't need thousands or millions to have a private trader working for you day by day," reads the "About" page of Bitstrade. "You don't need to make a huge investment to have a personal account assistant assigned to you. With Bitstrade all of these are possible from only $10.00!"
The authorities claim that there are many details about Bitstrade which are missing, which are raising a number of red flags. First and foremost, Bitstrade is not registered to trade securities in the state of New Jersey. Moreover, a lot of critical information is missing which should ideally be provided to the investors beforehand. This includes details such as the addresses of the company, the names of their officers, as well as the risks of investing in Bitstrade.
Attorney General Gurbir Grewal said in a statement: "The Bureau’s action today reinforces our commitment to protecting investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments. We want to make sure that investors tempted to cash in on the cryptocurrency rage aren't being lured into sending funds to an anonymous internet entity without knowing where the funds are going or how they'll be used."
This decision from the State of New Jersey proves that the state governments across the US are getting strict on potential cryptocurrency scams. In the past, the state of Texas and the state of North Carolina also issued cease and desist notices to the Ponzi website Bitconnect which later shut down its operations globally. In another recent incident, the state of Texas sent a similar notice to Davorcoin which was running a similar scam.
Such a policy is beneficial for the consumers as it ensures that novice, unsuspecting traders do not fall victims to these scams and Ponzi schemes. Other states and even other countries should seek inspiration from this and ban such platforms which are scamming the users in the name of quick returns on cryptocurrencies.