The Colorado Securities Commissioner Gerald Rome has recently issued an immediate cease and desist orders to four companies undergoing initial coin offerings (ICOs). According to DCEBrief’s article published on November 11, 2018, the Colorado Division of Securities has already cracked down on 12 ICOs that have violated the Colorado Securities Act.
Task Force Hunts Down Fraudulent ICOs
The Colorado Department of Regulatory Agencies recently launched an ICO Task Force, designed to investigate any potential fraudulent activity from cryptocurrency and blockchain-related companies. These companies include Bitcoin Investments (also doing business as DB Capital), PinkDate, Prisma, and Clear Shop Vision.
Bitcoin Investments claims to be a top leading blockchain investment firm and the largest institutional owners of cryptocurrencies and currently manages over $700 million across different funds. The firm claimed that any investors with the company could expect over one percent daily returns on their DB Token and the average investment over a two-month period in 2017 experienced a 95 percent return on investment. Bitcoin Investments also mentioned that they had support and endorsement from celebrities such as the NBA’s Carmelo Anthony. The ICO Task Force was naturally concerned about their description and the company’s extremely high rate of returns.
Bitcoin Investments also spoofed the U.S. Securities Exchange Commission (SEC) website on www.Howeycoins.com. The site has almost the same format, images, and employee team. The DB Token ICO is also not registered with the Colorado Regulatory authorities as security.
Clear Shop Vision, a shop designed to create a shopping ecosystem that saves time and money for users, underwent three ICOs in the last five months. The site encouraged investors to send ether directly to the companies Ethereum wallet than a proper cryptocurrency exchange.
Fraudulent ICOs Claim Extremely High-Profit Percentages
The ICO Task Force also found that fraudulent ICO companies claim extremely high-profit percentages and return on investments. An example is Pinkdate, an anonymous world-wide escorting service looking to raise over $5 million through an ICO to create the PinkDate Platform (PDP) token.
Pinkdate’s white paper noted that investors would receive 50 percent of net profits through dividends, which would be given in the form of bitcoin, ether, monero, or bitcoin cash. The ICO Task Force was unable to locate a proper business location and other members of the team apart from the president and COO with no identifiable last name. The Pinkdate ICO is also not registered with the local authorities.
Meanwhile, Prisma coin, a proposed lending and arbitrating investment platform, claims that through the lending model that investors can receive up to 27 percent return on their initial investment. Not only are these claims ridiculously high, but the white paper also fails to disclose and explain the potential risks of investing in the ICO. The offering also was unable to register with the Colorado Government.