The Texas State Securities Board and Bitcoin: The First State to Act

What is the Board, and what does it say it regulates?

A small agency with an old statute and a narrow claim. The Legislature created the State Securities Board in 1957; the governor appoints its five members, they appoint the Securities Commissioner, and the Commissioner runs about seventy-five people in Austin, Dallas, Houston, and Corpus Christi – twenty-seven of them in the Enforcement Division – on a budget near nine million dollars, while the fees it collects send roughly a hundred and sixty million a year back to the treasury.^[34][33] Travis Iles, a career enforcement lawyer at the agency since 2001, became its eighth commissioner on September 1, 2017; Jeramy Heintz, who ran enforcement after Joe Rotunda, became its ninth on June 18, 2026.^[35][36] Its law is the Texas Securities Act, recodified in 2022 as Title 12 of the Government Code, and its test for what counts as a security is the Supreme Court of Texas's in Life Partners v. Arnold – the investment-contract test the Board's 2025 annual report warns a pending federal bill “threatens.”^[37][32] The claim it makes for itself is precise. From the 2018 sweep report: “It is important to note that the TSSB is not regulating the cryptocurrencies themselves, only the investments that claim to use virtual currencies in an investment program.”^[4] It does not license exchanges, wallets, money transmitters, or the kiosks that took $56.8 million from Texans last year; that is the Department of Banking. It does not sue in the state's name; when it goes to bankruptcy court it goes through the Attorney General as its counsel.^[38][17] What it does is enter orders, and it entered the first.

What was the first order?

USI-Tech, December 20, 2017. The Board's first word on the asset had been a warning – Commissioner John Morgan's February 25, 2014 investor alert on digital currencies, Mt. Gox and volatility and anonymity, issued five weeks before the Department of Banking's Memo 1037 and while a South Austin gun store was running the state's second Bitcoin ATM.^[1] Its first order came nearly four years later, twelve weeks into Iles's tenure: an emergency cease-and- desist, ENF-17-CDO-1753, against USI-Tech Limited of Dubai and two American agents selling Bitcoin-mining contracts through “targeted craigslist advertisements, YouTube videos, and standalone websites” – a “daily return of 1%,” thirty-five percent referral commissions, and no disclosure of “the facilities used to mine bitcoins, the costs of mining bitcoins.” USI-Tech announced it was leaving the U.S. and Canadian markets within three weeks.^[2] The Board's annual reports have described it every year since as “the first state securities regulator to enter an enforcement action against a cryptocurrency firm,” and NASAA, the association of state regulators, told Congress in September 2025 that the order that followed – BitConnect, January 4, 2018, a lending program promising up to forty percent a month from a company that “has disclosed virtually nothing about its principals, financial condition, or strategies” – is the model of what a state can do.^[32][3][40] BitConnect's coin peaked at $2.6 billion two days after the order and lost 98% of it within weeks.^[4] The state that defined the asset in 2021 and bought it in 2025 had already, in 2017, been the first to police the people selling it. The sequence is on the Texas Bitcoin law timeline; the merchant era the 2014 alert belongs to is on the grassroots era.

What did the 2018 sweep find?

That almost nothing being sold was registered and much of it was fiction. Enforcement opened thirty-two crypto investigations in the four weeks from December 18, 2017 and published the tally on April 10, 2018: nineteen of the thirty-two claimed to use Bitcoin, none of the promoters was registered to sell securities in Texas, thirty of thirty-two sold through online ads and social media, at least five guaranteed returns “some as high as 40% per month,” six paid recruitment commissions, and only eleven disclosed a physical address.^[4] Seven orders came out of it, including LeadInvest, which advertised Justice Ruth Bader Ginsburg and two former Solicitors General as its advisers and staffed its website with stock photographs.^[3] On May 21 NASAA announced Operation Cryptosweep – more than forty U.S. and Canadian regulators, roughly seventy investigations, thirty-five actions taken or pending – and the Board's release said Texas “took the lead in organizing, managing, and coordinating” it, with Rotunda serving as vice-chair of NASAA's enforcement section.^[5][6] By August the continent-wide count was forty-seven actions and two hundred investigations, sixteen of the actions Texas's; Iles: “We have learned that bad actors are leveraging widespread interest in cryptocurrencies to defraud the investing public.”^[7] Rotunda, that November, gave the agency's theory of the thing: “Bitcoin, not surprisingly, lit the spark”; “cryptocurrencies reflect an exciting new market and their technologies present new opportunities”; and “It's not the product. It's the people.”^[8] The organizer who has called the Board's work “impeccable” is on Lee Bratcher and Bitcoin.^[39]

What did it do about the lenders?

Notice them, early, and without freezing anything. On July 22, 2021 the Board filed a notice of hearing against BlockFi over its interest accounts, the third state to do so – “This legal action affords BlockFi and its affiliates the opportunity to respond to our allegations and present admissible evidence,” Rotunda said – and on September 17, one of four states acting the same day, against Celsius: “more than $344,000,000 in assets under management from more than 9,000 Texas residents,” sold on after regulators had warned the company privately in May.^[9][11] “I am not trying to put the company out of business or shutter its doors,” Rotunda told CoinDesk. “Instead, I recognize digital assets and blockchain technology are paving the way for exciting new opportunities … We are simply trying to get Celsius in compliance.”^[12] The notices were not emergency orders; each said in terms that existing accounts could go on earning interest. BlockFi settled on February 14, 2022 – fifty million dollars to the states split equally and fifty to the SEC, Texas's share $943,396.22 against the roughly $688 million that 36,443 Texans had deposited; Iles: “Complying with existing laws and regulations promotes continued investor protection.”^[10] On April 12, 2022 the Board noticed Voyager: “more than $500 million held in more than 170,000 Voyager Interest Accounts belonging to Texans.”^[16] Then the summer. Celsius froze withdrawals in June and the Board learned of it on social media – “very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to” – and Voyager filed for bankruptcy on July 5.^[13] In the bankruptcy court the Board and the Department of Banking, through the Attorney General, objected to Celsius selling its stablecoins and were overruled in a forty-five-page opinion; Celsius was closed by a multistate consent order in July 2024 in which the states forwent a fine so the assets would go to account holders, and Voyager by a consent order with its plan administrator on March 20, 2026, with no fine, finding that the earn program “generally operated at a deficit.”^[14][15][20]

What is the FTX declaration?

The most consequential document the agency has filed on the asset, and it was a sworn statement about a test account. When FTX US won the auction for Voyager's customers in September 2022, the Board objected – through the Attorney General, its counsel – and attached the declaration of Joseph Jason Rotunda, dated October 14. He had opened an account on the FTX app under his own name and an Austin address, moved ether into it, and watched: “Despite the fact I identified myself by name and address, the FTX Trading App now shows that I am earning yield on the ETH. The yield is valued at 8% APR. … This appears to be an investment contract.” The declaration disclosed an open, self-initiated investigation of FTX Trading, FTX US, and Sam Bankman-Fried.^[17][18] “We want Texans to have the opportunity to invest in what they want to invest in,” Rotunda told the Tribune. “We want to make sure they're protected.”^[18] FTX collapsed three weeks later. In November the Board noticed Bankman-Fried personally, seeking refunds to Texans ahead of any fine and up to $250,000 more per act against Texans over sixty-five; on February 2, 2023 an administrative law judge found the Board had no personal jurisdiction over a non-resident and cancelled the hearing.^[17][19] The federal case that finished what the state one could not is on the case tracker.

What has it done since?

Led working groups, and returned some money. Nexo settled in January 2023 for $45 million, half to the states, Texas's share $420,000 – “our work does not begin and end with traditional products and established markets.”^[21]In June 2023 a Texas-led group moved ex parte against Abra and its chief executive, alleging the company had been insolvent since March, had defaulted on loans, and was moving customer funds to Binance while holding $1.8 million for 1,600 Texans; the January 2024 settlement opened a withdrawal window and converted what was left to dollars sent to Texans – “we prioritized returning money to retail investors.”^[22]In November 2023 Texas led five states against GS Partners, Swiss Valorem Bank, and Josip Heit – a metaverse staking pool, skyscraper vouchers, a token, seven layers of commissions – four weeks after opening the file; the September 2024 settlement returned deposits to about 800,000 customers in more than 170 countries, with claims run at the respondents' expense. Iles, unusually candid: “In my experience, regulatory actions that materially benefit many investors are unfortunately rare … Today's settlement is different.”^[24][23] Between those, the metaverse casinos of 2022 – “Virtual reality can leave you virtually broke” – and the AI-trading-bot orders of 2023, in which Texas again led the states.^[26][27] In 2026 the Board has entered five crypto orders through September, all issued by Deputy Commissioner Cristi Ochoa: TEXITcoin's mining seats in February, a tokenized-real-estate scheme and an “AI-enabled” Bitcoin-signals MLM in June, among them.^[28][31] The TEXITcoin case is the one that went to trial: Robert J. Gray demanded a hearing, his counsel argued the SEC's March 2026 guidance on mining pools takes the seats outside securities law, and the State Office of Administrative Hearings took four days of testimony in August, with the Board argued by Heintz two months into his commissionership and briefs due in October.^[29][36] The mines the seats claimed to be in are on the Texas Bitcoin mining map.

The honest counterweight: the losses, the offshore orders, and the line it draws

Four things. First, the cases it lost or withdrew: the Bankman-Fried notice dismissed for jurisdiction, the Celsius objection overruled, and Apertum – an April 2025 emergency order against a Heit token that Iles set aside himself on July 31, 2025, the only crypto order the Board has vacated on its own motion, against a respondent it had settled with the year before, with no public explanation; the respondents' lawyers said the case “should never have been brought.”^[19][14][30] Second, what the orders are. Most of the seventy-odd are emergency cease-and-desists against promoters in Dubai, England, Hong Kong, Russia, and Estonia who never requested a hearing and never paid; the Board publishes no collection figures, and its own commissioner conceded in 2024 that actions which “materially benefit many investors are unfortunately rare.”^[31][23] The recoveries it can name are modest against the exposures it cited: $943,396 from BlockFi against $688 million deposited, $420,000 from Nexo, nothing from Celsius or Voyager.^{[10][21][15][20]} Third, timing. The lender notices came five to sixteen months before the failures and left every existing account earning; no source quantifies whether a single Texan withdrew because of them. Fourth, the line. The Board did not join the ten-state Coinbase staking action or any Kraken case, and has said nothing about why; it has taken no located position on the state's own Bitcoin reserve; and the fraud that cost Texans most last year, the kiosks, is outside its statute by its own reading.^[25][4][38] Against all of that stands the one thing no other state can say: it went first, on December 20, 2017, and it has not stopped.

The fair reading is that the Board is the most active and least powerful institution in the Texas Bitcoin record – an agency of twenty-seven enforcement lawyers that has entered more orders against crypto promoters than any other state, drawn its authority as narrowly as it can be drawn, and told the industry it regulates, in its enforcement director's words, that the problem was never the product. What it cannot reach – the exchange, the kiosk, the non-resident – it names, and leaves to the agencies and the courts that can.

Where does the Board stand today?

As of September 2026: a new commissioner three months in, a TEXITcoin decision pending after the August hearing, five 2026 orders on the index, and an annual report warning that a federal bill could narrow the Texas definition of an investment contract that every one of its crypto orders rests on.^[36][29][32] The office that represents it in court, and has done far less on its own, is on the Texas Attorney General and Bitcoin; the federal prosecutions that reached the people its orders could not are on the Texas crypto enforcement report; the statute-by-statute record it enforces the edges of is on the Texas Bitcoin law timeline. This page is the first order, and the seventy after it.