Texas regulators targeted an alleged crypto investment and MLM scheme that promised millionaire status, passive income, and high monthly returns through recruitment and trading codes. The order also cites withdrawal fees, investor lockups, and claims of low-risk, AI-assisted trading.
Key Takeaways:
- Recruiters allegedly promised investors they could become millionaires within months through aggressive referral incentives.
- Regulators cited claims of 60% monthly returns, principal protection, and a 99.6% trading success rate.
- Investors faced withdrawal hurdles that included a 20% handling fee and a later 12% charge tied to taxes and account transfers.
Texas Order Flags Crypto Returns, Recruitment, and Investor Lockups
The Texas State Securities Board stated on June 3 that it issued an emergency cease and desist order against BG Wealth Sharing LTD and DSJ Exchange PTY Ltd. The order targets an alleged crypto investment and multilevel marketing (MLM) scheme aimed at Texas investors. Regulators described DSJ as a purported crypto exchange tied to passive investments and AI-enabled trading claims.
The order also names BG Wealth Sharing Group LLC, Thaddious Thomas, and Gagandeep Sarkaria. Regulators reported that BG Wealth sent investors trading codes through Bonchat, a messaging app, and instructed them to enter the codes on DSJ’s purported crypto exchange. The process gave investors little control over trades while making the platform appear active. It also rewarded recruitment, allowing participants to receive more trading codes by bringing others into the program.
The regulator stated:
“Recruiters allegedly lured investors with claims that a small initial deposit could generate ‘lifetime monthly income’ and turn participants into millionaires within months through aggressive recruitment bonuses.”
The scheme used several pressure points to build investor confidence. Regulators cited claims of a 99.6% success rate, guaranteed principal protection, monthly returns of at least 60%, and a doubling of principal in about 40 days. Those promises made the platform appear systematic and low-risk. The order indicates investors depended on expert systems, AI-enabled strategies, and scheduled trading codes.
Exit Fees and State Actions Raise Investor Risk Concerns
The emergency cease and desist order states that investors seeking withdrawals faced a handling fee of about 20% of account value. Respondents presented the charge as an anti-arbitrage and anti-money laundering measure. Texas also reported that BG Wealth later demanded another 12% from each investor’s account value. That payment was tied to taxes and account transfer fees.
The regulator noted:
“After disabling standard account withdrawals, the operators demanded that victims pay an additional 12% ‘exit tax’ or ‘compliance fee’ out of pocket before any funds could be released.”
Texas joins Washington and Hawaii in taking formal state securities action involving BG Wealth Sharing or affiliated entities. Utah and Alaska also issued investor warnings tied to BG Wealth Sharing and DSJ Exchange, but those alerts were not formal cease and desist orders. The broader response shows how the operation reached investors across several states.
The exit strategy created another risk for investors. After regulatory warnings, respondents blamed DSJ for fraud claims and directed investors toward HQIEX, described in the order as a replacement exchange service. That shift could keep victims engaged while adding uncertainty. It also redirected attention from withdrawals, missing disclosures, fund custody, trading activity, and commingling concerns.
