Securities Commissioner Travis J. Iles brought an emergency action to stop Mind Capital OÜ aka Mind Capital Tech SL, a Spanish and Estonian domiciled company, from illegally promoting an International Cryptocurrency Pyramid Scheme to Texans.
According to the order, investors purchase MCcoin, an internal utility token purported to be persistently valued at $1.00. Their purchase of MCcoin purportedly permits them to participate in a crypto-fiat arbitrage trading program. The platform allegedly uses advanced algorithms to analyze the cryptocurrency market and identify the appropriate time to buy and sell digital assets for a profit. Mind Capital is boasting the program's success, claiming it earns between 0.5 and 1.5 percent returns daily.
According to the order, Commissioner Iles notes several recent cases involve fraudulent trading schemes built around some new artificial intelligence or secret software. “These schemes can be dangerous,” said Commissioner Iles. “Although promoters may boast about these platforms' successes, potential investors are rarely allowed to verify their claims – or even determine whether the applications exist.”
According to the order, Mind Capital also implemented a ten-level “pyramid scheme” to encourage sales of its investments.
The order named Georgetown resident Craig Kintzel as an agent and accused him of illegally promoting Texas's scheme. Kintzel and other agents supposedly receive eight percent of the profits earned by recruited investors and between two and eight percent of the profits earned by recruited investors at various levels of the pyramid.
The order against Mind Capital also named President and CEO Gonzalo Garcia-Pelayo, Vice President Oscar Garcia-Pelayo, Network Construction Consultant Rubén Arcas, Expansion Manager Manuel Arniz, Social Media Director Cristina Kelly Lopez and Brand and Creative Director Alejandro Mejía.
The Respondents not registered as dealers or agents in Texas, and investments in the crypto-fiat arbitrage trading program are not registered or permitted for sale in Texas.
The order alleges the Respondents are intentionally concealing key information from investors, such as the significant risks associated with the securities offering. According to the law, they are also not providing investors with critical information about the principals of Mind Capital and its ability to generate represented returns.
The order against Mind Capital follows a recent emergency action against Mirror Trading International, another offshore firm allegedly using a multilevel marketing program – a recruitment system similar to a pyramid scheme – to fraudulently offer cryptocurrency investments in Texas. Mirror Trading International, like Mind Capital, allegedly claimed it was using sophisticated artificial intelligence to time and trade in a financial market.
Source: Jul 16, 2020 Joe Rotunda, Director, Enforcement Division, at jrotunda@ssb.texas.gov