Nui and its owner Darren Olayan are promising to fight back after Texas regulators slapped them with a securities fraud cease-and-desist order this week.

The company claims it will "vigorously defend" itself against the charges, according to a statement released yesterday. But the response raises an immediate question: how will they defend offering unregistered securities when Texas securities law mirrors federal law almost exactly?

Nui has been pitching the Kala altcoin and related products to investors across the country. For months, the company assured affiliates that major U.S. law firms had blessed the whole operation. That included claims of representation by Jones Day, one of the nation's largest firms. Those assurances now look hollow.

The Texas Securities Board issued its cease-and-desist on Wednesday. Nui responded by telling affiliates it would stop selling its products in Texas—but nowhere else. The company continues offering unregistered securities throughout the rest of the United States, suggesting it views the Texas action as an isolated problem rather than a signal of broader legal trouble.

The company has until Saturday, August 11th to file an official response to the regulator. What Jones Day intends to argue in that response remains unclear. Convincing Texas regulators that unregistered securities sales are somehow legal under state law seems like a steep climb.

The cease-and-desist caught us before it went public. Nui published its response statement yesterday, the day after the order landed. But the company's public positioning—that it has top legal firepower and everything is above board—crumbles under scrutiny. If Jones Day signed off on this operation, why did it take a state securities regulator to stop it?

Nui's track record with transparency isn't reassuring either. The company has repeatedly assured investors and affiliates of regulatory compliance that apparently didn't exist. The gap between those claims and reality widened considerably this week.

August 11th came and went without a public update from either Nui or the Texas Securities Board. The company also scrubbed its official response blog post from the internet, deleting the very statement it had just released to defend itself.

Then on February 21st, 2019, the Texas Securities Board handed down its judgment. Nui had to pay a $25,000 fine for violations of the Texas Securities Act.

The fine marks the end of a chapter that began with bold assurances from company leadership. What started as Nui's confident claims about legal representation from top firms ended with a regulatory penalty and a company quietly deleting its defense.

🤖 Quick Answer

What cease-and-desist order did Texas regulators issue against Nui?
Texas Securities Board issued a cease-and-desist order against Nui and owner Darren Olayan for securities fraud, targeting their promotion of unregistered Kala altcoin and related investment products to U.S. investors without proper registration compliance.

How does Nui plan to respond to regulatory charges?
Nui announced it will "vigorously defend" itself against the cease-and-desist order, though legal experts question the defense strategy given Texas securities law's alignment with federal regulations governing unregistered securities offerings.

What representations did Nui make regarding legal counsel?
Nui assured affiliates that major U.S. law firms, including Jones Day, had approved its operations, claims later proven unfounded when regulatory action commenced against the company's securities offerings.

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