The alleged cryptocurrency trading scheme perpetrated by Nickolas Steele, aided by his CryptoFacts Facebook page, should be shut down as an immediate danger to Texas residents, according to an Emergency Cease and Desist Order entered May 15.
The State Securities Board order targets a cryptocurrency trading program allegedly operated by Steele, who uses three different names, administers a Facebook group called TheCryptoFacts, and vows to fund COVID-19 relief efforts with what he describes as his cryptocurrency “trading money.”
Steele is not registered to sell securities in Texas.
Steele, who also goes by Nick Vop Steele and Nick Steele, is advertising on the craigslist.org site for Houston, seeking investments in a cryptocurrency trading program. The order lists addresses for Steele in Wisconsin and Illinois.
Steele is soliciting investments of between $5,000 and $50,000, according to the order, and repeatedly promising potential investors that he can generate returns of at least 100%. Steele has been directing investors to TheCryptoFacts, a public group hosted by Facebook and the place where Steele touts his prowess in trading cryptocurrencies.
The pandemic-caused economic downturn and volatility in the markets is a boon for his trading business, Steele is allegedly telling potential investors.
Steele is claiming he earned “huge profits” on bitcoin trades in February and March 2020. According to TheCryptoFacts page, Steele is purportedly using cryptocurrency trading funds to benefit COVID-19 relief programs.
After the Enforcement Division of the State Securities Board warned Steele that he was violating the registration and disclosure provisions of the Texas Securities Act, Steele began describing himself as a “consultant.” The new description is a way to avoid “scrutiny” by the “Texas SEC,” according to the order.
According to the order, however, Steele continued to represent that he will trade cryptocurrencies on behalf of investors.
After being warned by the Enforcement Division, Steele allegedly told potential investors that they may “actually lose some money” due to the risks associated with trading cryptocurrencies.
According to the order, Steele is charging investors 20% of the “trade consulting profits” as a fee. He promises to pay investors at the end of a 12-month investment period.
Steele is directing investors to send their principal to a business account at PayPal held by a company called Nuvop Inc., which Steele controls.
Steele is telling potential investors that he does not mix business and personal funds, according to the order, but that is precisely what he is doing.
Steele is commingling funds to pay for expenses unrelated to the trading of cryptocurrencies and making payments to online dating services, ride-sharing services, and restaurants. He is also allegedly using a debit card associated with the PayPal account to withdraw cash from ATMs.