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The Colorado Department of Regulatory Agencies is investigating three cryptocurrency firms for promoting unregistered initial coin offerings in the state. The investigations are part of a growing trend of fraudulent companies looking to make quick money. All three firms failed to show up at a hearing to present evidence as ordered by the Commissioner.
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Three Crypto Firms Being Investigated
Colorado Securities Commissioner Gerald Rome.
Members of the Division of Securities of the Colorado Department of Regulatory Agencies (DORA), and of the stateâs initial coin offering (ICO) task force, have been investigating cryptocurrency firms for promoting unregistered ICOs in the state. The task force was set up in May to identify companies or individuals that might pose a risk to Colorado investors.
âAs part of an investigation into what has become a trend of allegedly fraudulent companies looking to make quick money,â the agencies announced Monday that âColorado Securities Commissioner Gerald Rome has signed orders to show cause for three cryptocurrency companiesâ soliciting to Colorado residents. The announcement details:
The companies that received the orders are Bionic Coin, Sybrelabs Ltd. (also known as Cryptoarb), and Global Pay Net (also known as Glpn Coin and Gpn Token). Previous orders were submitted to Bitcoin Investments Ltd. (also doing business as Db Capital), Estatex, Bitconnect Ltd., and Magma Foundation (also doing business as Magma Coin).
An order to show cause is a court order requiring recipients to justify, explain, or prove something to the court.
A spokesperson for DORA told news.Bitcoin.com that âthe hearing to show cause occurred on Friday, August 24thâŠand none of the companies listed responded,â adding:
There likely wonât be another hearing. Given that no respondents showed, the Division presented the case to an administrative law judge, who must determine within 2 weeks whether the case made by the Division represents factual evidence. At that point yes, the Commissioner will then issue cease and desist orders.
Bionic Coin
Bionic Coinâs website provides information about an ICO for bionic or BNC, an ERC20 token aimed at enabling âinstant payments to anyone, anywhere in the world, and to simplify the purchase of electronic devices and software,â the agencies described. However, âthere is no physical address or control person identified on the site.â
In addition to promising that âBionic will grow your money without any effort,â the site lists âsupposed media partners such as Forbes magazine, but investigators could not locate any reference to such a company or product on the sites purportedly promoting it.â
The site also attempts to incentivize users to promote the coin by âstating that individuals who post to popular social media sites and blogs will receive up to ten thousand tokens per post.â
Sybrelabs
Sybrelabs Ltd., also known as Cryptoarb, is supposedly located in Cambridgeshire, England. Its website promotes âan investment pool that allows for trading on cryptocurrency exchangesâ by using the âcryptoarbitrage robotâ tool that allows the firm to âautomate many factors occurring with effective arbitrage on several instruments,â the agencies explained.
The company encourages its members to promote the investment pool and recruit other members by providing them with marketing materials and souvenir products. The website also âoffers large percentages of profits for minimum participation of $25.00, up to soliciting âactive investment portfoliosâ of $25,000 or more,â DORA wrote.
Global Pay Net
Global Pay Net markets an ICO for glpn coins, âwhich allegedly provide an international financial platform that is based on blockchain technology,â according to the announcement. These tokens are described as âfull-value assets that represent oneâs share in the businessâ and that âinvestors receive 80 percent of the companyâs profits.â The company also offers incentives to promote âthe ICO in the form of up to five thousand GLPN coins per social media or online forum post.â
Furthermore, while the companyâs website lists multiple cryptocurrency professionals as being involved, two of them have denied involvement. A claim of a filing with the US Securities and Exchange Commission (SEC) also could not be verified, the agencies revealed, adding that there was no business filing in Washington State where the company is supposedly located.
What do you think of Colorado investigating these three firms? Let us know in the comments section below.
Images courtesy of Shutterstock, the Colorado government, and DORA.
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