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Colorado Securities Regulators Crack Down on 18 ‘Fraudulent’ ICOs, With More on the Way

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Colorado Securities Regulators Crack Down on 18 ‘Fraudulent’ ICOs, With More on the Way

The Colorado State Department of Regulatory Agencies (DORA) has filed cessation orders against four ICOs that were allegedly involved in ‘fraudulent and illicit’ practices, bringing the total number of ICOs stopped by the state’s bodies to 18 this month, Denver Business Journal reported on November 22, 2018.

Four More ICOs Hit with Cease-and-Desists by Colorado Securities Regulator

Gerald Rome, securities commissioner at the Colorado Department of Regulatory Agencies

(Source: Denver Business Journal)

Following up on their promise made earlier this year, authorities in the U.S. appear to have to have greatly increased their focus on initial coin offerings. Apart from big federal bodies such as the SEC that are going after the offerings on a national level, specific projects are also being targeted by local regulators in states such as Colorado.

The Colorado Division of Securities has now taken action against 18 ICOs, up from just over a dozen earlier in November. The Colorado Department of Regulatory Agencies said that there are at least two more orders pending, which could bring the total number of targeted ICOs to 20. All of the 18 orders reportedly come as a result of investigations by an “ICO Task Force” created in May 2018, which targeted potentially fraudulent activities targeting investors looking to profit from cryptos.

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In a November 20 press release, the Colorado Division of Securities announced that the U.S. state’s securities commissioner, Gerald Rome, has signed four new orders against Global Pay Net, Cred (doing business as Credits LLC), CrowdShare Mining and CyberSmart Coin Invest.

“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,” Commissioner Rome said in a statement. “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.”

Most Blacklisted ICOs Were an Easy Target

Such a high number of ICOs targeted in November 2018 could be attributed to the fact that many of them were involved in fraudulent activities that were easy to spot. According to the Colorado Division of Securities, Global Pay Net listed a number of cryptocurrency professionals as being involved in the project, two of whom have denied any affiliation with the company.

The company also offered incentives to individuals promoting the ICO on social media in the form of up to five thousand GLPN coins per post, which was enough on its own to raise red flags.

Another sign regulators looked for are bold claims about massive returns on investment. CrowdShare Mining claimed that investors at ground level will be able to gain a 1000 percent return from year 4.

On the other hand, CyberSmart Coin, another of the ICOs ordered to cease and desist, claimed to use robots to trade on Bitmex.com  and other crypto exchanges, and also to have “secret” methods of profit gaining. According to the Colorado Division of Securities statement, the site also allegedly promised investors 20 to 35 percent dividends each month.

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