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The orders are the result of investigations conducted by the ICO Task Force of the North Dakota Security Department, convened by the commissioner to identify ICOs and cryptocurrency investments that pose a risk to investors in North Dakota.
The effort is also part of Operation Crypto Sweep, a coordinated effort to investigate and apply multiple jurisdictions involving more than 40 US and Canadian securities regulators.
The three companies that promote potentially fraudulent securities are BitConnect / BitConnect LTD / BitConnect International PLC, Magma Foundation / Magma Coin / Magma and Pension Rewards Platform / Pension Rewards.
An ICO is a financing method used by startup companies to raise capital. Most ICOs involve projects that are in an idea state, as described in reports known as white papers.
Companies create a new virtual coin or token, which is then sold online to ICO investors, in exchange for cryptocurrency or legal tender. Companies sell their ICOs through their websites, social media platforms and online markets.
Common red flags of fraudulent ICOs include plagiarized white papers containing spelling and translation errors, fictitious executive teams represented by internet photos, fake addresses and phone numbers, testimonies of fake celebrities, the promise of no risk and high returns, false claims on the law on compliance and the promise of additional ICO tokens to promote the agreement and bring other investors.
Investors should also be wary of hackers "faking" legitimate ICOs to intercept and steal money from investors.
BitConnect, BitConnect LTD and BitConnect International PLC have been previously ordered by several states including Colorado, North Carolina and Texas, related to unregistered activities and frauds. The Bitconnect website remains active and is still accessible by residents of North Dakota. The site offers cryptocurrency for sale entitled "BitConnect Coin" or "BCC" and claims to be a platform designed for multiple investment opportunities that generate income.
Magma Foundation, Magma Coin and Magma operate a website that claims to have offices in Manchester, the United Kingdom and Denver. The company is the subject of a termination and termination order issued by the Colorado Securities Division, however, the review of the Magma website indicates that the site is still active and available to residents of North Dakota. The website contains information on the purchase of Magma Tokens which represent an interest in gold and / or exchange-traded funds. The website contains allegedly fraudulent content, including images of people represented as the Magma Foundation's executive team, which are not actually related to Magma and are given false names.
The Pension Rewards or Pension Rewards platform solicits investors through their website, accessible to residents in North Dakota. The website falsely states that their coins will multiply rapidly and generate a great profit for investors, and that growth will "take place in a very short time".
