The original source of this post was the TEXITCOIN reddit group. It has so much valuable info I copied it here.

Many Texit people don’t know what real crypto is so this post is here to help you understand.

If a project fails any of these criteria, it is not cryptocurrency; it is fiat with a marketing budget.

1. Permissionless Infrastructure (No Kill Switch)

• The Standard: Anyone can run a node and validate the ledger without asking permission.
• Texit Coin FAILS: You cannot connect your own miner to the network. Instead, they sell “mining shares” for you to buy into their closed system. The founder, Bobby Gray, is on record stating, “You can’t mine it without our permission… we can take [your blocks], but you can’t take ours.” This is the definition of a centralized server, not a blockchain.

2. Radical Transparency (Don’t Trust, Verify)

• The Standard: Every transaction and account balance must be visible on a public explorer to be independently audited.
• Texit Coin FAILS: There is no verifiable proof of the “mining operations” they claim to run. While they use a block explorer that looks like Litecoin’s, the actual hashrate and mining power are opaque. Independent investigations have found no evidence of the claimed data centers, suggesting the “mining” rewards are simply numbers entered into a database by the founders, not rewards from securing a network.

3. Bearer Asset Status (Not Your Keys, Not Your Coins)

• The Standard: You control funds via a private key; no admin can freeze or move them.
• Texit Coin FAILS: In November 2025, a security breach revealed that “admin accounts” had backend access to user wallets and password reset links. If an admin can reset your password or access your wallet via a “backend,” you do not have self-custody; you have a bank account with a security flaw.

4. Immutable Settlement (Finality)

• The Standard: History cannot be rewritten; there are no “undo” buttons.
• Texit Coin FAILS: Because the mining is permissioned and controlled by a single entity (the founders), they possess 51%+ of the network power by default. They can rewrite the chain, reverse transactions, or “roll back” the ledger whenever they choose. It is a database they can edit, not a blockchain that is set in stone.

5. Hard-Coded Monetary Policy

• The Standard: Inflation and issuance are defined by code, not a boardroom.
• Texit Coin FAILS: The project’s economics are managed manually. The founders have admittedly engaged in “buy-backs” to prop up the price and altered commission structures when they ran out of cash. This is central banking behavior (printing/managing supply to fix bad policy), which is exactly what crypto was invented to escape.

6. Censorship Resistance

• The Standard: The protocol is blind to who you are; no one can block your transactions.
• Texit Coin FAILS: Since you must have “permission” to mine and likely use their proprietary wallet/interface to interact with the coin, they can blacklist any user at any time. If you criticize the project, they can simply turn off your “mining share” payouts or freeze your account access.

A separate note on TXC being an unregistered security:

Texit Coin (TXC) is likely to face enforcement action not because the government hates Texas, but because the project is violating the Securities Act of 1933. It fails the Howey Test—the Supreme Court’s standard for determining what constitutes an investment contract—on every single prong.

1. The Investment of Money

• The Reality: Users pay approximately $1,000 upfront to buy a “mining share.”
• The Violation: You are not buying hardware that is shipped to your house (which would be a product). You are sending capital to a central organizer (Texit Coin/Bobby Gray).

2. In a Common Enterprise

• The Reality: Your money is pooled with other investors’ money to fund the operations of the “company.” The success of your investment depends entirely on the founders managing these funds and the network correctly.
• The Violation: If the founders walk away, your “share” becomes worthless. You are strictly reliant on the enterprise, not on your own sovereign ability to mine code.

3. With an Expectation of Profit

• The Reality: Marketing materials explicitly promise “daily passive income” and project price targets (e.g., “$16 by 2026”). The sales pitch is financial freedom, not utility.
• The Violation: When you sell a token based on future returns rather than current utility, you are selling a security.

4. Derived From the Efforts of Others

• The Reality: This is the smoking gun. You do not run the software. You do not maintain the servers. You do not pay the electric bill. You pay money, and the “Texit Team” claims to do the work for you.
• The Violation: This is the definition of a passive investment contract. By retaining control over the “mining” while taking your money, they have created a security that must be registered with the SEC.

The Consequence

Texit Coin has not filed a Form C or Form D with the SEC. This means they are operating an illegal securities offering.

When (not if) the SEC and TSSB steps in, the standard playbook is:

1. Asset Freeze: All “company” wallets are frozen.
2. Website Seizure: The portal where you view your “earnings” goes dark.
3. Disgorgement: The founders are sued for every dollar raised.
4. Value Collapse: Because the token has no utility outside the founders’ control, the price goes to strictly zero overnight.

The “Bootstrapping” Myth: Legitimate blockchains use centralization as temporary training wheels to fix early bugs; Texit Coin has welded them to the frame. After nearly two years, there is no roadmap to decentralize because doing so would destroy their revenue model: if they allowed permissionless mining (real crypto), the market for their $1,000 “mining shares” would vanish instantly. They are financially incentivized to keep the network closed forever—this isn’t a startup phase, it’s a permanent dictatorship.