The Colorado Division of Securities this week issued cease and desist orders to four companies conducting initial coin offerings (ICOs), instructing them to stop violating the Colorado Securities Act. According to a report on Colorado’s official website, state Securities Commissioner Gerald Rome has now issued twelve ICO-related orders based on alleged securities violations.
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.
The four companies and ICOs offer insight into the type of companies turning to ICOs for their fundraising needs. They also provide a glimpse at the various ways in which some companies attempt to get around clear restrictions on fraud and misrepresentation.
Bitcoin Investments refers to itself as a “leading blockchain investment firm” and reportedly issued an ICO that claimed support from stars like the NBA’s Carmelo Anthony. Colorado investigators were concerned by the company’s promised rate of return, as well as a company website page that appeared to be nearly identical to an SEC webpage.
PinkDate boasts that it provides “the world’s first global escorting platform.” The company’s website claims that its first ICO is complete and promises to conduct a second offering later this year.
Prisma was cited for failing to disclose investment risks to investors interested in purchasing its Prismacoin for use on the company’s proposed “lending and arbitraging investment platform.” The company apparently promised investors returns as high as 27 percent.
Meanwhile, Clear Shop Vision has issued no fewer than three initial coin offerings in the last five months. The company has apparently claimed that its ICOs are to raise funding for the creation of a “shopping ecosystem that saves time and money for users.”
In addition to various misrepresentations and other questionable tactics, none of the four companies had properly registered their ICO offerings with the Division of Securities.