Colorado Securities Commission (CSC) has ordered three crypto firms to show cause for promoting unregistered initial coin offering (ICO). The Commission wants the firms to “justify, explain and prove” the legality of their ICOs.
The order comes from the office of Colorado Securities Commissioner Gerald Rome. According to a notice by Colorado Department of Regulatory Agencies (DORA), the firms claim to trade in cryptocurrencies. The notice further notes that a special taskforce is on top of the issue and they hope to resolve it soon. The taskforce, “ICO Task Force” is an investigating arm working under the ambit of DORA.
Increasing cases of scams
According to a DORA news release, the exercise is part of a statewide investigation of suspected scammers. The agency says the investigation is a look into “what has become a trend of allegedly fraudulent companies looking to make quick money.”
As per the release, the companies are Bionic Coin, Sybrelabs Ltd., and Global Pay Net. The note observes that the firms made exaggerated claims with the main aim to misinform. The firms are said to overly tout the value of their products to investors. In one instance, Bionic assures investors that their money will increase if they invest with them. A statement on the Bionic website reads, “Bionic will grow your money without any effort.” The company also includes on its website reputed media firms like Forbes as media partners.
The ICO Task Force finds the disclosures false and in bad faith. The team did not find any reference to Forbes in the links that purportedly promote Bionic. DORA also finds the company’s customer loyalty programme outrageous.
On the other hand, DORA claims that Sybrelabs is guilty for purveying an unregistered security to potential investors. The firm claims to facilitate cryptocurrency trade using a ‘crypto arbitrage robot.’ Whether or not the bot can perform the tasks is unknown.
The third company is said to also use excessively flowered language to drive up their token sales. According to DORA, the firm promises that, “investors receive 80 percent of the company’s profits.”