The Colorado Securities Commissioner, Gerald Rome, has now signed orders for 18 initial token offerings that cause them to stop offering unregistered securities in Colorado, the Department of regulatory agencies announced. At least two other orders are pending.
Four companies received orders on November 20: Global Pay Net; Cred (doing business as credits, LLC); CrowdShare Mining; and CyberSmart Coin Invest.
Four other termination and disposal orders were signed on November 8 for the ICOs solicited by Bitcoin Investments, Ltd (which also carries out activities such as DB Capital), PinkDate, Prisma and Clear Shop Vision Ltd.
Bionic Coin and Sybrelabs Ltd., also known as CryptoARB, have received orders to show the case (which is a step before the termination and cancellation of orders) on August 27 – the same day as Global Pay Net.
Orders are the result of investigations of a ICO Task Force convened by the commissioner in May to investigate "potentially fraudulent activities aimed at investors excited by the prospect of financial gains through the cryptocurrency market".
According to the DORA announcement, the details of the four orders issued on November 20 are as follows.
Global Pay Net is a company that markets an ICO through https://ico.glpn.info. This site, accessible to Coloradans, proposes to sell "GLPN Coins" which allegedly provide an international financial platform based on blockchain technology. A description of the supply of coins states that the GLPN coins are "full-value assets that represent their share in the business" and that "investors receive 80% of the company's profits". The site also lists multiple cryptocurrency professionals as involved, two of whom have denied that this is the case. It was not possible to verify an additional application for filing in the US Commission's Security and Trade Database (EDGAR), as the telephone number listed for the 2011 deposit is disconnected and no company registration is registered in the State of Washington in which society is presumed to be. Incentives are offered to people who promote ICO in the form of up to five thousand GLPN coins for social media or post on the online forum.
cred, doing business as Credits, LLC, presumably uses the https://credits.energy website to promote "Crypto with a mobile mining app that supports green energy" and is urging a currency ICO known as "Cred (CX)." The site, which is accessible from Coloradans, states that "Credible credit holders can be sure that their credit is worth tangible" and will presumably further stimulate investors' expectations of future profits. The alleged president and director Luke Ingraham, who has contacts in Las Vegas, Nevada and Westminster, Colorado, will manage the offer, which is a security in the state of Colorado.
CrowdShare Mining, managing an ICO through the website https://crowdsharemining.org/#, is accessible by residents in Colorado and allegedly promotes an ICO for a cryptocurrency currency called "CrowdShare Mining (CSM)." The site states that its staff will implement cryptocurrency through renewable energy sources, and presumably promises that investors will earn 50% of the mining profit in the form of dividends. Furthermore, the website states that CSM offers many ways to generate profits through "easy involvement" and that "at the 4th year, every year [return on investment] it will be at least 1000 percent for those who have bought CSM tokens since the beginning. "
The website for CyberSmart Coin Invest, http://cybersmartcoin.com/default.aspx, offers a cryptocurrency titled "CyberSmart Coin (CBST)" and allegedly states: "Our statements and ideas are geared towards creating a vast network of" profit making machines " "and friends with many benefits for all our CBST users, even for those who only have 1 coin." More clearly, the site claims to use robots to operate on Bitmex.com and other cryptographic exchanges, and also to have " secrets "methods of earning, according to the DORA announcement. The site also promises dividends from investors 20 to 35% each month.
In addition, the CyberSmart site Coin Invest presumably operates a model whereby investors are obtained through paid referrals. The site states: "You can not participate in the ICO of CyberSmart if you are resident domiciled or buy token from a place where SAPPI may be illegal", but no further context is provided and the site is still accessible by residents in Colorado.
"The simple number of orders placed against ICOs should be a red flag for all investors that there is a real risk that the ICO you are considering is a fraud," Rome said in the announcement. "Our investigations show that there are fraudsters who will simply create a fake ICO to steal investors' money or falsify a legitimate ICO to trick investors into paying them unfairly."
All respondents were directed to immediately cease and renounce all alleged violations of the Colorado Securities Act, to include unregistered securities and fraud.