Texas State Securities Board Dismisses Securities Law Claims on Crypto Sales

The Texas State Securities Board ("TSB") set aside an Emergency Cease and Desist Order issued by the Texas State Securities Commissioner over the sale of a digital asset.

The Commissioner issued the Emergency Cease and Desist Order alleging that the respondents fraudulently sold a crypto token in violation of the Texas Securities Act. The respondents challenged the Order, arguing that: (i) the digital asset in question was not a security under US federal law or the Texas Securities Act; (ii) they did not offer or sell securities; (iii) they did not act as dealers. Further, the respondents also challenged the TSB's jurisdiction over their activities.

The TSB found sufficient grounds to dismiss the Emergency Order based on these defenses and the Respondents’ cooperation with the Enforcement Division, through counsel, in providing information about their business activities.