Bitconnect seems to have come under the scrutiny of state regulators in the US after the company announced that it was launching an ICO. Last week, the Texas securities board issued a cease and desist order to the company over the planned ICO effectively stopping the company from carrying out such activities in the state of Texas. This week, it is the turn of North Carolina Securities Division to slap the company with another cease and desist order.
The NC Securities Division released a statement that the company was issued the order because they were in the process of selling unregistered securities to residents of the Tar Heel State. The division said that the lending and staking company was not registered as a salesman for securities in the state and therefore not licensed to carry out such business activities in the state. The release also stated that the division having studied the upcoming Bitconnect ICO found out that material facts were concealed by the company.
Though the North Carolina Securities Division did not specifically mention the material facts concealed by the company, it is obvious that agencies with oversight functions are not taking too kindly to ICOs which they view their tokens as securities.
Probably complicating the Bitconnect issue is their emphasis on recruiting investors who they promise profits as high as 40 percent monthly. The company is widely viewed as operating a Ponzi scheme. And being based overseas in the UK, the Texas regulators had earlier pointed out that they did not feature a known physical address on their portals.
The issue by the North Carolina Securities Division is a temporary cease and desist order, which Bitconnect has 30 days to contest. Without a contest, the order which cited the reason as an intention to sell high-risk cryptocurrency will become permanent.