Texas Investment Adviser Faces Washington State Charges Over Misleading Crypto Portfolio Claims
From the desk of Jim Eccleston at Eccleston Law
Washington state securities regulators have charged an Austin, Texas registered investment adviser (RIA) and its founder with making misleading statements about the risks tied to one of its model portfolios, which invested heavily in crypto-backed products and volatile exchange-traded funds, according to InvestmentNews.
The Washington State Department of Financial Institutions Division of Securities issued a cease and desist order against Advisors Crypto Inc. and its founder, Eric W. Kendrick, alleging the firm failed to disclose material information about its investment strategy and risks, and recommended investments unsuitable for senior clients.
The firm previously operated as KG Advisors, serving clients from an office in Washington, before rebranding as Advisors Crypto in 2023. According to its Form ADV, the firm currently manages $11.2 million in client assets.
Kendrick, who serves as the firm's president, CEO, and chief compliance officer, told InvestmentNews in an email that he and the firm dispute how Washington securities regulators have characterized these "legacy matters." He explained that the allegations stem from KG Advisors' historical Washington advisory business during the unusual 2021 to 2022 market period, and do not reflect Advisors Crypto's current Texas-based adviser model. Kendrick added that the SEC's San Francisco office previously conducted a full investigation into these same legacy issues, and that after a multi-year review, SEC staff concluded this past January that the matter warranted no recommendation of enforcement action.
According to his SEC profile, Kendrick has not been registered with his own RIA since the end of 2023. Since then, he has settled three separate investor complaints totaling $741,000, with the most recent settlement occurring in 2024. Investors in those cases raised allegations similar to Washington state's claims. Kendrick denied all allegations of wrongdoing in connection with those settlements.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, securities regulation, registered investment adviser, cryptocurrency regulation, enforcement action, investment fraud





