Texas Regulators Crack Down on Alleged Crypto Pyramid Scheme

The Texas State Securities Board has taken action against an alleged cryptocurrency investment scheme that used aggressive recruitment tactics to lure investors with promises of easy wealth.

The emergency cease and desist order targets BG Wealth Sharing LTD and DSJ Exchange PTY Ltd, which allegedly operated a multilevel marketing (MLM) scheme aimed at Texas investors. Regulators claim the operation promised investors high monthly returns through AI-enabled trading claims and aggressive recruitment incentives.

According to the order, recruiters used Bonchat, a messaging app, to send investors trading codes that gave them little control over trades while making the platform appear active. The scheme also rewarded recruitment, allowing participants to receive more trading codes by bringing others into the program.

The regulator highlighted several red flags in the operation's marketing strategy, including claims of a 99.6% success rate and guaranteed principal protection. Investors were allegedly promised monthly returns of at least 60%, with some claiming they could double their principal in about 40 days.

Regulators also cited concerns over investor lockups and exit fees. When investors attempted to withdraw their funds, they faced a handling fee of around 20% of the account value. The operation later demanded an additional 12% payment tied to taxes and account transfer fees, which was presented as an anti-arbitrage measure.