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ICO Fraud: Colorado Securities Division Shuts Down Four More ICOs

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ICOs

Last Thursday, Colorado Securities Commissioner Gerald Rome signed cease and desist orders for four ICOs. The securities division, based on the investigations of its newly created ICO Task Force, issued 12 such orders.  The four latest recipients were Bitcoin Investments, Ltd, PinkDate, Prisma, and Clear Shop Vision Ltd.

All of these ICOs were unregistered securities, and their company information raised some flags

Bitcoin Investment Ltd. claimed on their website that investors could expect at least a 1% daily return. It also said that “the average investment return over a two month period in 2017 was an amazing 95%”. Considering that the SEC clearly explains that promising returns indicates a securities status, it’s no wonder Rome decided to intervene. In fact, he said that Colorado aims to be an “initiative leader” for state-conducted crackdowns.  Finally, Bitcoin Investment Ltd. displayed odd information about its staff, allegedly lifted from another ICO.

The other three ICOs had similar, suspicious issues. All made specific promises of returns of investment, and had potentially bogus information about the company leaders. Pinkdate, for example, even advertised itself as operating anonymously. The COO shared only a first name, and the site explained that the company was “designed to allow the core team to operate with anonymity.” This is exactly the sort of thing that the SEC and other lawmakers are not tolerating whatsoever regarding ICOs.

These cease and desist orders also closely follow the election of crypto-friendly governor Jared Polis

Polis served on the Congressional Blockchain Caucus that recently petitioned the SEC for clearer regulations. This was in an effort to move towards a safe, successful crypto ecosystem.

In fact, some might at first assume that these crackdowns on ICOs are severe. However, they are definitely in the interest of attracting and protecting legitimate crypto and blockchain businesses.  As Rome himself explained,

“We want 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. There are many companies in Colorado that are working hard to conduct their ICOs the right way, and we are eager to continue working with them to build a regulatory framework for the industry as it relates to securities”

While the SEC has yet to issue specific regulations, what’s unacceptable to them is by now fairly clear.  The ICO Task Force mirrors this in their approach towards illegitimate ICOs.

 

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