A North Dakota?s ICO Task Force investigation established that three unregistered ICOs were posing a risk to North Dakota investors. As a result, North Dakota Securities Commissioner Karen Tyler issued cease and desist orders against the projects.
North Dakota is one of the few regions in the US that promote a conducive environment for cryptocurrency. Moreover, the state allows initial coin offerings (ICOs) to operate within given regulatory provisions.
Most importantly, any ICO must register with authorities and present a clear prospectus that has utility. Towards ensuring compliance to the rules, North Dakota Securities Department set up the ICO Task Force.
According to official communication from North Dakota Securities Department, the three companies allegedly ran unregistered ICOs hence endangering investors. Per the news release, the companies are Crystal Token, Advertiza Holdings (Pty) Ltd., and Life Cross Coin a/k/a LifecrosscoinGmbH.
The release explains that the cease and desist orders come after a series of a multi-agency investigation. ?The effort is also part of Operation Cryptosweep, a coordinated multi-jurisdiction investigation and enforcement effort involving over 40 U.S. and Canadian securities regulators,? reads the news release.
Heat signatures of unregistered and fraudulent ICOs
Further, the release elucidates that the regulators were able to smoke the ICOs out while relying on various red flags. Firstly, the ICOs presented plagiarised white papers to investors which contained obvious grammatical errors. Secondly, they presented fictitious executive teams with photos pulled off internet web pages. Thirdly, the projects presented fake business addresses alongside noon-existent phone numbers.
In addition, the statement notes that the projects claimed falsified celebrity endorsements. Perhaps most shocking is the promise of no risk and sky-high returns for investors. Certainly, this is a great scam since the ICO and cryptocurrency market is quite volatile.
As a result, North Dakota Securities Department directed investors to a bulletin by the SEC which calls out scam ICOs. Particularly, the bulletin highlights the heat signatures of a fraudulent ICO. According to the North Dakota Securities Commissioner, her office will remain vigilant against such projects in future. ?Investors should be exceedingly cautious when considering a related investment,? she said.