Recently commissioner of the North Dakota Securities Department, Karen Tyler, issues cases and desist orders against three companies (Crystal Token, Life Cross Coin, and Advertiza Holdings) for offering unregistered and potentially fraudulent securities in the form of Initial Coin Offerings (ICOs).
According to the North Dakota Securities Department, these companies are operating illegally in the state. ICO Task Force of the North Dakota Securities Department recently conducted an investigation to identify the cryptocurrency and ICO related companies which can pose a risk to the North Dakota investors. The effort was a part of “Operation Cryptosweep”, a coordinated multi-jurisdiction investigation and enforcement effort which involves over 40 United States and Canadian securities regulators.
It is not the first time that the department has taken action against crypto and ICO related companies in the state. Last month, under the Operation Cryptosweep the department issued orders against three other companies namely BitConnect, Pension Reward Platform, and Magma Foundation.
In a news release, the regulators said that the companies Crystal Token, Advertiza Holdings, and Life Cross Coin had placed fraudulent statements on their website with claims of excessively high returns. The companies are also charged for insufficient disclosures and misrepresentation of facts. According to the North Dakota Securities Department, all of these firms are not even registered to offer securities in the state. Advertiza allegedly falsely claimed that it had filed with the Securities and Exchange Commission (SEC) while the website of Life Cross Coin is operated from a Berlin IP address which is associated with ransomware, Trojans, and identity fraud.
According to Karen Tyler, these companies are the example of criminal cases which use the promise of ICOs to lure investors and steal their money. These companies are using all the buzzwords and the hype to steal the money of investors. Tyler said that
“The continued exploitation of the cryptocurrency ecosystem by financial criminals is a significant threat to Main Street investors.”
She also added that
“In formulaic fashion, financial criminals are cashing in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment.”
The United States regulators are getting more cautious with the scammers and taking actions on the federal level. SEC is planning to sue the ICO projects which are falsely claiming to have their approval even when they do not have. SEC is also taking actions against the ICOs which are offering pump and dump schemes.