Division of Securities continues ICO crackdown with four more cease and desist orders

Division of Securities continues ICO crackdown with four more cease and desist orders

Cryptocurrency Blockchain

Division of Securities continues ICO crackdown with four more cease and desist orders

Division of Securities continues ICO crackdown Commissioner Gerald Rome has now signed orders for twelve initial coin offerings directing the cessation of unregistered securities in the state of Colorado. The orders are the result of investigations by an “ICO Task Force” convened within the Division, part of the Department of Regulatory Agencies (DORA), in May of this year to investigate potentially fraudulent activity targeting investors excited about the prospects of financial windfall through the cryptocurrency market. 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.

Bitcoin Investments, Ltd, operating through https://double-btc.info, allegedly claims to be a “leading blockchain investment firm and one of the largest institutional owners of cryptocurrencies…manag[ing] over $700 million” across multiple funds. It does not appear to be affiliated in any way with the site Bitcoin.org. The site allegedly claims that investors can expect over 1 percent daily returns with additional returns on internal exchanges of “DB Token.” The site also allegedly claims that “the average registered investment return over a two month period in 2017 was an amazing 95 percent.” The ICO, which lists a number of celebrity promotors such as NBA basketball player Carmelo Anthony, also provides a wallet address where investors can send Bitcoin in exchange for DB Tokens.

Most concerning to investigators was the alleged “spoofing” of a U.S. Securities and Exchange Commission webpage, www.Howeycoins.com, that was set up to educate potential cryptocurrency investors about the associated risks. Bitcoin Investments’ site incorporates the same format, exact images, and an identical employee team as the SEC site. Despite access to the site by Colorado residents, the DB Token ICO has not been registered as a security with the Division.

Pinkdate, a company providing “anonymously-operated, world-wide escorting service[s]” at https://pinkdate.is, purportedly seeks to fundraise over $5 million through an ICO in a cryptocurrency referred to as PinkDate Platform (PDP). Through an offered white paper, 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 site allegedly claims that business operations “are designed to allow the core team to operate with anonymity,” and as such investigators were unable to identify a business location or any member of the team other than President Sara Stevens and a COO named Roger, with no last name given. Despite accessibility by Colorado residents, the PinkDate ICO has not been registered with the Division of Securities.  

Prisma’s website, https://www.prismacoin.net, accessible to Colorado residents, requires users to purchase the digital currency Prismacoin (PRIS) in order to use a proposed lending and arbitraging investment platform. The website allegedly claims that through the lending model 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 ICO, which constitutes a securities offering under the Colorado Securities Act, provides a white paper but does not disclose potential risks of the investment. Further, the offering has not been registered with the Division of Securities.

Clear Shop Vision, Ltd’s website, https://ico.clearshopvision.com, also accessible to Coloradans, has offered three ICOs since June of 2018. The stated objective is to create a shopping ecosystem that saves time and money for users. The offered token, “ORC Token” is allegedly represented as having “serious appreciation potential,” and the site directs investors to send Ether cryptocurrency directly to the companies Ethereum wallet rather than through a cryptocurrency exchange. In addition to the general solicitation of an unregistered securities offering, the company also allegedly offers to pay users in ORC Tokens for promotion of the ICO on social media, translation services, and referrals.

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