Colorado Securities Commissioner Gerald Rome has signed orders to show cause for three cryptocurrency companies promoting unregistered Initial Coin Offerings in Colorado as part of an investigation into what has become a trend of allegedly fraudulent companies looking to make quick money, according to a news release issued today by the Department of Regulatory Agencies.
According to the release, investigations are being conducted by members of DORA’s Division of Securities, who are on an ICO Task Force which was convened by the Commissioner in May with the purpose of identifying companies or individuals that might pose a risk to Colorado investors.
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), the release stated.
“Bionic Coin’s website, bionic-coin.io, which is accessible by Colorado residents, provides information for an ICO named ‘Bionic’ or ‘BNC,’ the purpose of which is to enable instant payments to anyone, anywhere in the world, and to simplify the purchase of electronic devices and software,” according to the release. “The site has information regarding the sale of its tokens, a whitepaper, blogs and frequently asked questions, and promises ‘Bionic will grow your money without any effort.’ The site also lists supposed 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.”
According to DORA’s release, the site also attempts to incentivize users to promote Bionic by stating that individuals who post to popular social media sites and blogs will receive up to ten thousand tokens per post. There is no physical address or control person identified on the site.
“Sybrelabs Ltd., allegedly located in Cambridgeshire, England, also promotes an unregistered security to Colorado residents in the form of an investment pool that allows for trading on cryptocurrency exchanges through what is represented as a ‘cryptoarbitrage robot,’ or a tool that would allow the company to ‘automate many factors occurring with effective arbitrage on several instruments,'” according to the release.
It said the site, cryptoarb.org, offers large percentages of profits for minimum participation of $25, up to soliciting ‘active investment portfolios’ of $25,000 or more. Similar to Bionic Coin, this site also encourages members to promote the investment pool and solicit others to join by providing marketing materials that include a PDF presentation, online banners and souvenir products.
“Global Pay Net is a company marketing an ICO via 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,” according to the release. “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, according to the DORA, 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.
Editor’s note: This story has been amended to reflect corrections made by the Department of Regulatory Agencies. The orders issued to the three companies were orders to show cause, which is a step before the cease and desist orders.