Karen Tyler, the Securities Commissioner of North Dakota, has issued 3 cease-and-desist letters against 3 separate companies all “promoting unregistered and potentially fraudulent securities in North Dakota in the form of Initial Coin Offerings (ICOs),” according to a letter.
Scams on Scams
The letters were sent after some investigation via North Dakota’s ICO Task Force, which is responsible for researching ICOs and crypto investments that are risky for North Dakotan investors. This search is a part of “Operation Cryptosweep,” a “coordinated multi-jurisdiction investigation and enforcement effort involving over 40 U.S. and Canadian securities regulators.”
The alleged companies are Crystal Token, Advertiza Holdings (Pty) LTD., and Life Cross Coin also known as LifecrosscoinGmbG.
Crystal Token was representing itself as an ERC20 token on the Ethereum blockchain, and one that provided an “evolutionary multi-utility token” to trade and earn up to 2% interest every day. However, the exchange was not registered to sell securities in the state of North Dakota.
Advertiza falsely advertised itself as a utility token, when in reality it is a security. The group wrongly claimed to have filed itself under the SEC under federal Rule 506c of Regulation D—and therefore is not registered to sell securities.
Finally, Life Cross Coin is working from a Berlin-based IP address “associated with ransomware, trojans, and identity fraud.” The project claims that its coin, LICO, is used for donating to charity. The website even mentions that investors can put in money and receive a “huge return on investment” by holding and selling later. Allegedly, the represented team was made up of entirely fake names, and the website was full of phony content. Of course, the project wasn’t registered to sell securities in North Dakota either.
“The continued exploitation of the cryptocurrency ecosystem by financial criminals is a significant threat to Main Street investors,” says Tyler.
The letter states that the most common securities law violations by ICOs are “the offer and sale of unregistered securities, sales by unregistered agents, and engaging in fraudulent practices.”
Scams happen all the time in the cryptocurrency industry. Recently, a Russian Crypto Firm attempted to impersonate Coinbase, while the SEC went after two cryptocurrency companies for alleged false marketing.
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