The Colorado Department of Regulatory Agencies is investigating three cryptocurrency firms for promoting unregistered initial coin offerings in the state. The investigations are part of a growing trend of fraudulent companies looking to make quick money. All three firms failed to show up at a hearing to present evidence as ordered by the Commissioner.
Three Crypto Firms Being Investigated
Members of the Division of Securities of the Colorado Department of Regulatory Agencies (DORA), and of the state’s initial coin offering (ICO) task force, have been investigating cryptocurrency firms for promoting unregistered ICOs in the state. The task force was set up in May to identify companies or individuals that might pose a risk to Colorado investors.
“As part of an investigation into what has become a trend of allegedly fraudulent companies looking to make quick money,” the agencies announced Monday that “Colorado Securities Commissioner Gerald Rome has signed orders to show cause for three cryptocurrency companies” soliciting to Colorado residents. The announcement details:
The companies that received the orders are Bionic Coin, Sybrelabs Ltd. (also known as Cryptoarb), and Global Pay Net (also known as Glpn Coin and Gpn Token). Previous orders were submitted to Bitcoin Investments Ltd. (also doing business as Db Capital), Estatex, Bitconnect Ltd., and Magma Foundation (also doing business as Magma Coin).
An order to show cause is a court order requiring recipients to justify, explain, or prove something to the court.
A spokesperson for DORA told news.Bitcoin.com that “the hearing to show cause occurred on Friday, August 24th…and none of the companies listed responded,” adding:
There likely won’t be another hearing. Given that no respondents showed, the Division presented the case to an administrative law judge, who must determine within 2 weeks whether the case made by the Division represents factual evidence. At that point yes, the Commissioner will then issue cease and desist orders.
Bionic Coin’s website provides information about an ICO for bionic or BNC, an ERC20 token aimed at enabling “instant payments to anyone, anywhere in the world, and to simplify the purchase of electronic devices and software,” the agencies described. However, “there is no physical address or control person identified on the site.”
In addition to promising that “Bionic will grow your money without any effort,” the site lists “supposed media partners such as Forbes magazine, but investigators could not locate any reference to such a company or product on the sites purportedly promoting it.”
The site also attempts to incentivize users to promote the coin by “stating that individuals who post to popular social media sites and blogs will receive up to ten thousand tokens per post.”
Sybrelabs Ltd., also known as Cryptoarb, is supposedly located in Cambridgeshire, England. Its website promotes “an investment pool that allows for trading on cryptocurrency exchanges” by using the “cryptoarbitrage robot” tool that allows the firm to “automate many factors occurring with effective arbitrage on several instruments,” the agencies explained.
The company encourages its members to promote the investment pool and recruit other members by providing them with marketing materials and souvenir products. The website also “offers large percentages of profits for minimum participation of $25.00, up to soliciting ‘active investment portfolios’ of $25,000 or more,” DORA wrote.
Global Pay Net
Global Pay Net markets an ICO for glpn coins, “which allegedly provide an international financial platform that is based on blockchain technology,” according to the announcement. These tokens are described as “full-value assets that represent one’s share in the business” and that “investors receive 80 percent of the company’s profits.” The company also offers incentives to promote “the ICO in the form of up to five thousand GLPN coins per social media or online forum post.”
Furthermore, while the company’s website lists multiple cryptocurrency professionals as being involved, two of them have denied involvement. A claim of a filing with the US Securities and Exchange Commission (SEC) also could not be verified, the agencies revealed, adding that there was no business filing in Washington State where the company is supposedly located.
What do you think of Colorado investigating these three firms? Let us know in the comments section below.
Images courtesy of Shutterstock, the Colorado government, and DORA.
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