The Texas State Securities Board has stopped a network of Utah-based crypto-related companies from making fraudulent investment offers in the state. The board issued a cease-and-desist order on Wednesday against five companies and three individuals, all of which have addresses in Utah and one of whom also has a Texas address.

The network of crypto companies has, among other things, been promoting investments in cryptomining firm Mintage Mining to Texas residents. According to the cease-and-desist order, advertisements for the firms claim that Mintage “mines the right coin at the right time” and “evaluates the current cryptocurrency market and strategically picks the best coin to mine.” Mintage offered rental-share agreements for investors in its cryptomining programs.

The ads also tout the success of one respondent, Wyatt McCullough, and his uncle who made profits of 500% in seven weeks and 4,000% in 10 weeks, respectively. The ads also declare that investments in cryptomining are “the safest way to make money from crypto.”

Another company in the network, Symatri, recently conducted an initial offering for an ERC20 token, called Kala, on the ethereum blockchain. The firm claims that 13,000 investors signed up for the offering and that it sold more than 814 million tokens raising $8.5 million and more than 880 bitcoin. Symatri claims that “Kala will be fungible and transferable.”

Mintage claimed to have sold out its first offering of mining hardware called a Kala Rig at $3,500 per rig to payable in a variety of cryptocurrencies only. A second round of rigs was being offered at $4,000 per rig. The company promised to offer more rigs totaling more than 10,000 when the final tally was made.

Due to way Kala tokens were being introduced, Symatri claimed investors who purchased a Kala Rig in the first offering “can enjoy an approximate monthly reward amount of 250,000 Kala coins … [earning] approximately $5,000 in the first month alone.” Each Kala coin was valued at $0.02. Investors in the second offering of Kala Rigs would earn a minimum of 1,895 Kala a day or 56,861 a month with a value of $1,137 in the first month, “and will keep earning every month their rig is mining.”

The Texas regulator claims that all respondents committed registration violations and six intentionally failed to disclose material facts related to Mintage, include failing to identify the company’s principals and failing to disclose its place of business, among other things.

The detailed fraud charges are illuminating. Here’s an example (paragraph 72 of the order) related to Kala tokens:

In connection with the offer of Kala Rigs, [respondents] are representing the price of Kala is $0.02 per token, but they are intentionally failing to disclose material facts relating to the price of Kala, including but not limited to the following:

A. They are intentionally failing to disclose that the price of Kala is not being set by the free market, where the approximate price of Kala is set at the value a willing buyer would pay a willing seller,
B. They are intentionally failing to disclose the methodology used to price Kala at $0.02 per token,
C. They are intentionally failing to disclose that, when and if Kala is listed on a cryptocurrency exchange, the price of Kala may be less than $0.02 per token, and
D. They are intentionally failing to disclose that, until and unless Kala is listed on a cryptocurrency exchange, Kala is a relatively illiquid cryptocurrency and investors may not be able to readily identify a willing purchaser.

As of about noon Friday, there exists no Kala token among 1,633 crypto currencies and tokens listed at CoinMarketCap.

Last January the U.S. Securities and Exchange Commission halted a $600 million initial coin offering in Texas for offering and selling unregistered cryptocurrency.

Check out the Texas State Securities Board’s full cease-and-desist order.

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