Opening statements began Monday in a four-day administrative hearing over the Texas State Securities Board's emergency cease-and-desist order against TEXITcoin, related operations and founder Robert 'Bobby' Gray. According to reports from crypto.news, the securities board alleges that TEXITcoin, MineTXC, Blockchain Mint, and Gray offered unregistered investments and made misleading statements. The hearing before the State Office of Administrative Hearings will determine whether the emergency order should remain in effect, be modified, or be set aside. Attorney Jeramy Heintz for the Securities Board told the administrative law judge that the central issue is not whether TEXITcoin itself is a security, but rather the crypto mining packages that customers purchased to receive daily distributions of the cryptocurrency, known as TXC. Heintz emphasized that 'This is a case about economic reality over labels' and the legal question is straightforward: 'What was really being sold?'
The February 11 emergency order accused the respondents of illegally and fraudulently selling cryptocurrency mining packages ranging from $995 to $8,955 to Texans. As reported by crypto.news, Attorney Avi Perry representing Gray and TEXITcoin disputed both the fraud allegations and the characterization of the mining packages as securities. Perry compared the packages to an 'advance purchase of gold from a mining company', stating that customers received a digital commodity but no ownership interest in MineTXC, claim on its property, or right to its profits. 'You buy a package, you get TXC,' Perry said. 'Nothing more, nothing less.' The Securities Board alleged that purchasers never received or controlled mining equipment, did not select mining sites, negotiate electricity contracts, install or repair machines, or determine how mining rewards would be distributed. 'Purchasers supplied the capital, and respondents supplied and managed the enterprise,' Heintz explained.
The February order characterized the sales operation as a multilevel marketing scheme with a binary compensation structure. According to crypto.news, sales agents could earn $1,000 when each team accumulated three points, $2,000 for six points, and $3,000 for nine points. Weekly commissions were capped at $3,000 and could be paid in cryptocurrency, additional mining power, or the USDC stablecoin. The order alleged the operation used social media, online videos, radio advertisements, billboards and sponsorships to promote packages and recruit customers in Texas, elsewhere in the United States, and internationally. MineTXC's website claimed the operation had raised more than $147 million and paid approximately $65 million in commissions. The Securities Board alleges that the arrangement made the packages investment contracts and therefore securities because customers expected to benefit from the respondents' continuing management of the mining operation.
Regulators further accused the respondents of promoting Gray's business experience without adequately disclosing that his former company, Mulligan Mint, entered Chapter 11 bankruptcy in 2013 and was later converted to a Chapter 7 liquidation. As reported by crypto.news, Perry disputed both the fraud allegations and the characterization of the mining packages as securities. He argued that Gray repeatedly warned purchasers that cryptocurrency was speculative, offered no guaranteed returns, and told people not to spend more than they could afford to lose. Perry maintained that Gray publicly discussed the Mulligan Mint bankruptcy and other problems as they arose. The state's fraud case is based largely on alleged omissions, with Perry arguing that Gray had no legal duty to disclose the information cited by regulators and that much of it was disclosed anyway.
The TEXITcoin hearing is scheduled for four days through Thursday, August 20. According to the interview with crypto.news, Wisher remains optimistic about the project's momentum and expansion plans. The CLARITY Act is viewed as essential for fixing market structure by drawing clear lines between the SEC and CFTC. However, the CLARITY Act faces a cloture vote on September 15 requiring 60 votes just to begin debate. The legal questions in the case include whether TEXITcoin's packages were unregistered securities and whether their sale involved fraud or materially misleading representations. Wisher emphasizes the importance of honest money and building real connections in the cryptocurrency community, with the project continuing to push crypto payment adoption across Texas while maintaining its focus on verifiable, transparent mining operations.
