Regulators in Colorado are closing in on as many as 20 initial coin offerings (ICOs) following investigations into the practice, according to a press release issued by the state Division of Securities.
Commissioner Gerald Rome gave the go-ahead for action against 18 new ICOs in addition to two that are still outstanding, after the division’s ICO Task Force identified potential regulatory breaches.
Specifically, the promoters of these ICOs have been ordered to cease and desist from offering unregistered securities in the state of Colorado, in a move that echoes similar steps from regulators and law enforcement across the wider United States.
The task force was established back in May with the remit to investigate sites that were suspected of being involved in fraudulent activity, including issuing tokens and promoting ICOs which were in fact securities, but were not appropriately registered or listed.
These potentially criminal breaches are being flagged by regulators with increasing frequency, as the net continues to close around dubious initial coin offerings.
Commissioner Rome said that their investigations had identified examples of outright fraud and misrepresentation, as he urged investors to be cautious. He explained, “The sheer number of orders entered against ICOs should be a red flag to all investors that there is a real risk that the ICO you are considering is a fraud…Our investigations show that there are fraudsters who will simply create a fake ICO to steal investors’ money, or spoof a legitimate ICO to trick investors into wrongfully paying them.”
The latest four orders were issued to CyberSmart Coin Invest, CrowdShare Mining, Global Pay Net and Credits LLC, each of which the Commissioner said had been engaged in fraudulent conduct.
Global Pay Net is accused of misleading investors by promising “investors receive 80 percent of the company’s profits”, while CrowdShare claimed investors would see returns of 1000% within four years, according to the state regulator.
The volume of enforcement action being undertaken against ICOs is keeping regulators nationwide busy, with securities agencies at state level taking a lead from similar actions being pursued by the U.S. Securities and Exchange Commission (SEC).
Recently, regulators in Italy joined the increasingly international effort to clamp down on fraudulent ICOs, announcing action against three firms who were not registered in compliance with local financial laws.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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State regulators in Colorado got tough with for more initial coin offerings (ICOs), putting a cease and desist order on them last week. This brings the total number of ICOs rebuked by the state to a dozen.
On its website, the state’s Division of Securities identified the four ICOs as Bitcoin Investments, Ltd., PInkDate, Prisma, and Clear Shop Vision Ltd. In an interview with CoinDesk, Colorado Securities Commissioner Gerald Rome said the crackdown is part of the agency’s effort “to ensure that the state’s securities market and the investors that operate within it are protected from unscrupulous actors that are taking advantage of the enthusiasm surrounding this field to perpetrate fraud and in some cases outright theft.”
He noted that the enforcement action is meant to advance Colorado as an “innovative leader” in the cryptocurrency space. Though the state’s ICO Task Force has been active since May, the cease-and-desist orders come several days after Colorado elected Jared Polis, a member of the Congressional Blockchain Caucus in the U.S. House of Representatives, as its new governor.
Aside from Colorado, other U.S. states are also taking action against potentially fraudulent token sales. Last week, Texas issued emergency cease and desist orders to crypto mining firms based in Australia and Canada. In October, the North Dakota Securities Department served a similar order to three firms that were discovered to be involved in promoting fraudulent securities and illegal business practices related to ICOs in the state.
A coalition of North American securities regulators, including the Colorado Division of Securities, is conducting more than 200 investigations as part of its “Operation Cryptosweep,” whose goal is to stifle cryptocurrency scams in the region.
Bob Webster of the North American Securities Administrators Association (NASAA), who plays a coordinating role in Operation Cryptosweep, said Colorado is among the more active jurisdictions in the U.S., along with Texas, North Dakota and Massachusetts.
“You’re starting to see now the results of those investigations,” according to Webster.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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