Division of Securities has filed twenty cases against allegedly fraudulent ICOs
DENVER - (Nov. 20, 2018) - Colorado Securities Commissioner Gerald Rome has now signed orders for eighteen initial coin offerings directing the cessation of offering these unregistered securities in the state of Colorado. There are at least two more orders pending. 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. Today, the following four orders were signed against the following coin offerings.
Global Pay Net is a company marketing an ICO via https://ico.glpn.info/. This site, which is accessible by Coloradans, purports to sell “GLPN Coins” which allegedly provide an international financial platform that is based in blockchain technology. A description of the coin offering states that GLPN coins are “full-value assets that represent one’s share in the business” and that “investors receive 80 percent of the company’s profits.” The site also lists multiple cryptocurrency professionals as being involved, two of whom have denied that this is the case. An additional claim of a filing with the United States Securities and Exchange Commission’s EDGAR database could not be verified because the phone number listed for the 2011 filing is disconnected, and no business filing is registered in Washington State where the company is supposedly located. Incentives are offered to individuals promoting the ICO in the form of up to five thousand GLPN coins per social media or online forum post.
Cred, doing business as Credits, LLC, allegedly utilizes the site https://credits.energy to promote “Crypto with a mobile mining app that supports green energy,” and is soliciting for an ICO on currency known as “Cred (CX).” The site, which is accessible by Coloradans, alleges that “Cred holders can rest assured knowing that their Cred will be worth tangible value,” and allegedly further encourages investors’ expectations of future profits. Listed President and Director Luke Ingraham, who has addresses in both Las Vegas, Nevada and Westminster, Colorado, allegedly manage the offering, which constitutes a security in the state of Colorado.
CrowdShare Mining, operating an ICO through the website https://crowdsharemining.org/#, is accessible by Colorado residents and allegedly promotes an ICO for a cryptocurrency coin named “CrowdShare Mining (CSM).” The site claims that its staff will mine cryptocurrency through renewable energy sources, and allegedly promises that investors will earn 50 percent of the mining profit in the form of dividends. Further, the site allegedly claims that CSM provides many ways to generate profits through “easy engagement” and that “on the 4th year, yearly [return on investment] will be at least 1000 percent for those who bought CSM tokens at the very start.”
Finally, the website for CyberSmart Coin Invest, http://cybersmartcoin.com/default.aspx, offers a cryptocurrency titled “CyberSmart Coin (CBST)” and allegedly states that “Our statement and ideas are oriented in creating a large network of ‘profit making machines’ and friends with a lot of benefits for all our CBST users, even for the ones that will have just 1 coin.” Put more plainly, the site allegedly claims to use robots to trade on Bitmex.com and other crypto exchanges, and also to have “secret” methods of profit gaining. The site also allegedly promises investors 20 to 35 percent dividends each month. Further, the site allegedly operates a model whereby investors are obtained through paid referrals. While the site states “You may not participate in the CyberSmart ICO if you are a resident of domiciled in, or purchasing tokens from a location where YOU KNOW that it may be unlawful,” there is no further context provided and the site is still accessible by Colorado residents.
“The sheer number of orders entered against ICOs should be a red flag to all investors that there is a real risk that the ICO you are considering is a fraud,” said Commissioner Rome. “Our investigations show that there are fraudsters who will simply create a fake ICO to steal investors’ money, or spoof a legitimate ICO to trick investors into wrongfully paying them.”
All Respondents have been directed to immediately cease and desist all alleged violation of the Colorado Securities Act, to include unregistered securities and fraud.