The Division of Securities of the U.S. state of Colorado has issued four new cease-and-desist orders to stop as many companies from promoting their tokens to residents of the state. So far, action has been taken against a total of 12 initial coin offerings by the state’s securities commissioner.
Four New Orders
Colorado Securities Commissioner Gerald Rome on Thursday signed four orders “directing the cessation of unregistered securities in the state of Colorado,” the state’s Division of Securities announced. So far, the division has taken action against a total of 12 initial coin offerings (ICOs), the announcement details.
The orders resulted from investigations by the division’s ICO task force which is part of the state’s Department of Regulatory Agencies (Dora). It was set up in May “to investigate potentially fraudulent activity targeting investors excited about the prospects of financial windfall through the cryptocurrency market.”
According to Thursday’s announcement:
The four orders signed today are for ICOs solicited by companies Bitcoin Investments Ltd. (also doing business as Db Capital), Pinkdate, Prisma, and Clear Shop Vision Ltd.
While the four companies and their tokens are not registered in the state, the division explained that their websites are accessible to Colorado residents. The commissioner has directed all respondents to immediately cease and desist all alleged violations of the state’s Securities Act.
The division has previously taken ICO-related action against Bionic Coin, Sybrelabs Ltd., Global Pay Net, Estatex, Bitconnect Ltd., Magma Foundation, Linda Healthcare Corporation and Broad Investments. In addition, the division participates in Operation Cryptosweep, a coordinated effort by regulators in North America.
Companies Violating Securities Act
The first company named in the announcement, Bitcoin Investments Ltd., claims to have over $700 million in asset under management across multiple funds. The company promotes itself as a “leading blockchain investment firm and one of the largest institutional owners of cryptocurrencies.” In addition to allegedly claiming that “investors can expect over 1 percent daily returns with additional returns on internal exchanges” of its token, the company’s website states:
The average registered investment return over a two month period in 2017 was an amazing 95 percent.
Bitcoin Investments also lists a number of celebrity promoters for its ICO such as NBA basketball star Carmelo Anthony. However, “Most concerning to investigators was the alleged ‘spoofing’ of a U.S. Securities and Exchange Commission [SEC] webpage, www.howeycoins.com,” the Colorado securities division detailed. The Howeycoins website was set up by the SEC as an example of an ICO scam. The division asserted that Bitcoin Investment’s website “incorporates the same format, exact images, and an identical employee team as the SEC site.”
The second cease-and-desist order recipient, Pinkdate, provides “anonymously-operated, world-wide escorting service[s]” and purportedly seeks to raise over $5 million through an ICO. The order describes:
Pinkdate allegedly promotes a payout to investors of ‘50 percent of net profits through dividends,’ provides an investor portal, and offers to provide dividends in the form of bitcoin, ether, monero, or bitcoin cash.
The third company ordered to stop promoting its token to Colorado residents, Prisma, requires users to purchase its token in order to use its lending and arbitraging investment platform. Its whitepaper “does not disclose potential risks of the investment,” the division noted, adding that its website allegedly claims that investors “can profit up to 27 percent on their initial investment, and the ‘arbitrage bot’ can generate returns of up to 1.5 percent daily.”
The last of the four cease-and-desist order recipients, Clear Shop Vision Ltd., has launched three ICOs since June, according to the division. The order states that one of the tokens was represented as having “serious appreciation potential,” and investors are asked to send ether directly to the company’s wallet rather than an exchange. The company also allegedly offers to pay users in its token to promote the launch “on social media, translation services, and referrals.”
What do you think of the Colorado securities division taking action against all these ICOs? Let us know in the comments section below.
Images courtesy of Shutterstock, the SEC, and the Colorado government.
Need to calculate your bitcoin holdings? Check our tools section.